Correction of statement by Mr. Gibson. Hon. Mr. Macdonald — 3287

Meetings of public accounts committee. Mr. McGeer — 3288

An Act to Relieve Persons From Liability in Respect of Voluntary Emergency Medical and First Aid Services (Bill 134). Mr. D.A. Anderson. Introduction and first reading — 3290

Small Claims Amendment Act, 1975 (Bill 111). Hon. Mr. Macdonald. Introduction and first reading — 3290

Islands Trust Amendment Act, 1975 (Bill 97). Hon. Mr. Lorimer. Introduction and first reading — 3290

Florist for Dawson Creek opening. Mr. Phillips — 3290

Casa Loma investigation. Mr. D.A. Anderson — 3292

ICBC strike. Mr. Gardom — 3292

Bus fare passes. Mr. Wallace — 3292

Disbursement of funds by debt counselling service. Mrs. Jordan — 3293

DREE programmes for northern B.C. Mr. Smith — 3293

Coal Mines Regulation Amendment Act, 1975 (Bill 94). Second reading. Hon. Mr. Nimsick — 3293

Petroleum and Natural Gas Amendment Act, 1975 (Bill 107). Second reading Hon. Mr. Nimsick — 3294

Mines Regulation Amendment Act, 1975 (Bill 125). Second reading. Hon. Mr. Nimsick — 3298

British Columbia Railway Company Construction Loan Amendment Act, 1975 (Bill 27). Second reading. Mr. Fraser — 3300

The House met at 2 p.m.

Prayers.

MR. D.E. LEWIS (Shuswap): Mr. Speaker, today we have a visitor from the beautiful Shuswap, Mr. Steve Ingles, from the City of Armstrong. In past years Mr. Ingles boarded with a Member of this House, Mr. Hartley Dent, and I think that he must have been a good influence on Hartley; he joined the cloth. I would like the House to welcome Mr. Ingles.

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, sitting in the gallery are 75 Girl Guides between the ages of 10 and 14 from the Kitsilano district. They are accompanied by Commissioner Alice Block and Miss Faith Chang. I would appreciate it if the House would bid them welcome and be on their best behaviour today.

HON. A.B. MACDONALD (Attorney-General): Mr. Speaker, I'm rising on a point of privilege. Yesterday the Hon. Member for North Vancouver–Capilano (Mr. Gibson) roundly abused the ear and the patience of the Legislature and breached its privileges by a manifest and a totally false statement about section 88 of the federal Corporations Act.

The Hon. Member informed the House, quite wrongly, and asked whether the Member for Esquimalt (Mr. Gorst) was aware of section 88 of the Canada Corporations Act, which says that to exercise the power of a director one must own the shares absolutely in their own right. That statement is totally wrong, and was either made recklessly wrong or deliberately falsely made.

There is no exclusion or exception that affects the validity in respect to the company that you were speaking of. As I say, this is a breach of privilege of the Legislature that this kind of a statement should be made without really reading the section.

MR. SPEAKER: I take it that the Hon. Member was reading a section from a statute to the House.

HON. MR. MACDONALD: In saying the effect of it, he was totally wrong.

MR. SPEAKER: I would like to look at the matter but.... I'd like to get the facts straight.

MR. G.F. GIBSON (North Vancouver–Capilano): I'd gladly read the section into the record if that would be helpful.

MR. SPEAKER: Would you be so kind, so I know don't have to look it up?

MR. GIBSON: It's section 88(l) of the Canada Corporations Act —  Qualification of Directors Elected:

"Subject to subsection (2), no person shall be elected as a director of a company, or appointed as a director to fill any vacancy, unless he and any other company of which he is an officer or director is a shareholder and, if the bylaws of the company so provide, owning shares of the company absolutely in his own right, or in the right of such other company to an amount required by the bylaws of the company, and not in arrears in respect of any calls thereon."

Then subsection (2), which is longer and I'll read it too, if you wish, provides for certain exclusions of persons holding shares in trust which, though we haven't been access to the document of trust, would not appear to apply to the directors of this particular company.

HON. MR. MACDONALD: Mr. Speaker, had the Member taken the trouble to read that section yesterday, instead of misinforming the House, it says in effect that you can hold shares in trust in a federal company unless the bylaws otherwise apply.

The statement was totally wrong — what can you say about it? It's a breach of privilege that that kind of homework should be done in this House.

MR. D.A. ANDERSON (Victoria): You haven't read the Act yourself.

MR. SPEAKER: I'm sure the Hon. Member did not intend to deliberately mislead the House.

MR. GIBSON: I certainly didn't, Mr. Speaker. Indeed, the thing was part of a question. The question was being raised to the director concerned. And this seems to me a curious statement from an Attorney-General whose department has been part and parcel of making illegal expenditures.

HON. MR. MACDONALD: Mr. Speaker, that's the kind of thing we've been getting from that opposition over the past few months. I repeat: that without changing the subject, the Hon. Member was either recklessly wrong or deliberately misleading the House yesterday.

MR. SPEAKER: I'll look at the matter. But I point out to the Hon. Members, before we proceed any further on that question, that it's always the duty of the Member who is putting a question to the House to be responsible for the facts that are stated. I'm sure that every Member will take that seriously in

[ Page 3288 ]

the future because it does involve your own standing in the House.

MR. P.L. McGEER (Vancouver–Point Grey): Mr. Speaker, I too rise on a matter of privilege involving a different subject.

I draw your attention to Sir Erskine May, the eighteenth edition, page 132, which says: "It may be stated generally, that any act or omission which obstructs or impedes either House of Parliament in the performance of its functions, or which obstructs or impedes any member or officer from such House in the discharge of his duty..." is in contempt of the House.

This morning, Mr. Speaker, in the public accounts committee, we had a meeting of the committee called by the Chair, with notice and not during regular sittings of the House, where an adjournment was moved before an opportunity was granted for some Members to ask questions, and in particular, myself to make inquiries about the Columbia River treaty — something which had been promised by the Premier of the province in statements he's made before this House.

The adjournment of the committee, in my view, constituted a breach of privilege in the sense that it obstructed my responsibility to discharge my duties to the public by making inquiries of the Crown corporation officials.

Now, Mr. Speaker, in order to avoid a question of the kind occurring again, since in the adjournment motion the question was raised that the committee had sat illegally during hours when the House itself was sitting, I would like unanimous leave of the House to move the following motion:

That the Select Standing Committee on Public Accounts and Economic Affairs be empowered to sit at the call of the chairman during regular sitting hours of the House for the remainder of the session, except for recesses of the committee which may be called in order that Members may vote on questions placed before the Legislature...

Interjections.

MR. SPEAKER: Order, please.

MR. McGEER: ...by Committee of the Whole House.

MR. SPEAKER: The Hon. Member has sort of branched off from his complaint of a breach of privilege to what amounts to a substantive matter that would require notice on the order paper. Therefore I can't take both in one gulp. I would ask the Hon. Member to deal with these matters separately. Is that agreed — that we deal with them separately?

The first question on that point of privilege: I'd like to look at that. But I do point out to the Hon. Member, as he obviously knows from his statement, that it's not permitted, under our rules as they still exist here, to meet while the House is in session, and the House met at 10. Consequently, there would have to be some separate matter on that.

On the question of whether your complaint is well founded, I'd have to look at that in more detail, and I'll be glad to do so.

MR. McGEER: Mr. Speaker, may I just answer to that for one moment? There has been precedent in the House for committees to sit during the regular sitting hours. Indeed, I've been a member of such committees.

But that question aside. In order to deal with the matter of privilege, it would be taken care of simply by passing this motion. Then there would be no question at all raised about the appropriate hours for that committee to sit. I've asked for leave of the House for the motion to be put. If unanimous leave isn't granted, then, of course, it will just have to be a substantive motion.

MR. SPEAKER: May I deal with one thing at a time, please? The first point that you've made was answered upon the complaint of the Hon. Member for North Okanagan (Mrs. Jordan) on March 29, 1973, at page 193 of the Journals, where the whole situation in our House in regard to rules was set out. On page 195, I pointed out in that decision that standing committees would not be empowered to sit unless they had obtained the prior assent of the House and authority from the House to sit. Our rules differ and remain as they always have been in that regard. I quoted there from the Commons Journals of the British House, which we followed as our usage. Therefore we didn't have a standing order as they now have in the British House or in the Canadian House of Commons. Consequently, if you look at that, you will see all the authorities of the subject.

On the second point, if you are asking the House to suspend the rules so that a motion may be put without notice.... I presume that is your request.

HON. R.M. STRACHAN (Minister of Transport and Communications): On a point of order, I suggest that the proprieties are such that only a request from the committee itself should be accepted by this House for such a motion.

MR. SPEAKER: I do point out that a committee cannot report by any Member to this House without instruction from the committee. Therefore the matter is not known to the House except from a communication from the committee.

[ Page 3289 ]

HON. E. HALL (Provincial Secretary): Mr. Speaker, I am concerned about what has happened already in 20 minutes of this House, when a Member, seizing on what I consider to be a spurious point of order, establishes some sort of order of business in this House, when we have an order paper and a way of doing things in this House. To suggest to this House that any motion to adjourn any committee, whether of this House or a special committee or standing committee, is at any time out of order, is obviously a spurious point of order, Mr. Speaker. Secondly, to seize that point of order itself to try and use the time to convey some of his own wishes, which may or may not receive the support of this House, is in my view, an abuse of the order paper. There is no way this government is going to put up with that kind of abuse of the rules of the House. If the Member was here this morning, as he should have been, he would have heard the government itself express some concern over what was going on. We asked you, Mr. Speaker, to report to us.

So here we have somebody wandering in and seizing a spurious point to lecture the rest of the House. I reject that course of action.

MR. SPEAKER: I may say I have done my duty in having reported on that decision, page 193 of the 1973 Journals.

MR. McGEER: On a point of order, the Provincial Secretary is quite welcome to deny unanimous leave. The reason for putting it....

MR. SPEAKER: Then the matter is concluded and there will be no further debate.

Interjections.

MR. SPEAKER: There will be no further debate since there is no motion before the House.

MR. McGEER: Mr. Speaker, may I point out the reason for putting forward a motion at this time....

MR. SPEAKER: Order, please. The Hon. Member....

MR. D.M. PHILLIPS (South Peace River): Sit down!

MR. SPEAKER: The Hon. Member knows that you can only found a debate upon a motion. The motion has been denied acceptance.

Interjections.

HON. MR. HALL: Anarchy! Anarchy! That's what you want.

[Mr. Speaker rises.]

MR. SPEAKER: I thought the Hon. Provincial Secretary had stated to us just now that they were not prepared to accept this method of doing business.

AN HON. MEMBER: Ask for leave.

MR. SPEAKER: I will be very glad to. Shall leave be granted?

Leave not granted.

Interjections.

MR. SPEAKER: Order, please. The Hon. Member for North Peace River.

[Mr. Speaker resumes his seat.]

MR. SMITH: Mr. Speaker, I would ask your consideration of the fact that the morning sessions, which are constituted now from 10 to 12 with leave of the House....

MR. SPEAKER: By order, actually.

MR. SMITH: Well, they do not appear on our orders of the day. Our orders of the day start at 2 o'clock in the afternoon, Mr. Speaker, and they cover the prayers, the introduction of bills, the full orders of the day from 2 o'clock till the House adjourns at 6 and then from the evening session. So I suggest, Mr. Speaker, that you consider the fact that if we have no orders of the day printed for the morning sessions from 10 to 12, there can be no breach of the privilege of the House when a committee is sitting during that particular time.

MR. SPEAKER: I think the Hon. Member forgets that when we met last prior to this morning, the motion was that the House at its rising stand adjourned till 10 a.m., which means the House met at 10 a.m. The point is that the House is meeting for a specific purpose upon sessional order adopted recently to sit between 10 and 12 and go into Committee of Supply.

MR. SMITH: Mr. Speaker, then will you tell me why we have no orders of the day printed for these sessions?

MR. SPEAKER: Because the sessional orders told the House what they proposed to do when they met at 10 o'clock. Therefore the House was meeting. The House was adjourned from yesterday until 10 a.m. this morning as a House, if you will consult Hansard, and you will recall last night. Therefore it follows

[ Page 3290 ]

that the House is meeting, but it is meeting for a specified purpose between 10 a.m. and 12 noon and not for other purposes. Therefore orders of the day are not necessary between 10 a.m. and 12.

MR. SMITH: It would seem to me, then, Mr. Speaker, that the orders of the day should be published on the basis of meeting from 10 to 12 and the business of the House, instead of prayers, introduction of bills, and so on, will be Committee of Supply.

MR. SPEAKER: May I inform that House that it became almost impossible without additionally laying on quite a bit of staff to print up that morning orders of the day as well as the one at noon. It is difficult enough for the printers to get ready by noon. For that reason, we were reluctant to make that additional printing simply to put on each one: "Orders of the day — Committee of Supply between 10 and 12 a.m."

We thought that we could do that without any objection. But if the Members really want that put down each day, I think it would be a waste of print.

Introduction of bills.

AN ACT TO RELIEVE PERSONS FROM
LIABILITY IN RESPECT OF VOLUNTARY
EMERGENCY MEDICAL AND FIRST AID
SERVICES

On a motion by D.A. Anderson, Bill 134, An Act to Relieve Persons From Liability in Respect of Voluntary Emergency Medical and First Aid Services, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

SMALL CLAIMS AMENDMENT ACT, 1975

Hon. Mr. Macdonald presents a message from His Honour the Lieutenant-Governor: a bill intituled Small Claims Amendment Act, 1975.

Bill 111 Introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

ISLANDS TRUST AMENDMENT ACT, 1975

Hon. Mr. Lorimer presents a message from His Honour the Lieutenant-Governor: a bill intituled Islands Trust Amendment Act, 1975.

Bill 97 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral questions.

FLORIST FOR DAWSON CREEK OPENING

MR. PHILLIPS: I'd like to direct my question to the Minister of Public Works. With regard to the provincial government building opening in Dawson Creek last fall, would the Minister advise why a florist was flown into the area to look after the arrangements when there were florists in the area?

HON. W.L. HARTLEY (Minister of Public Works): I've been waiting for this question for quite some time now, Mr. Speaker. I'm surprised that the Member hasn't asked this much earlier. He did write about it. I had it researched and I found that for the first time in the history of public works in this province we used a local florist. I'm shocked that before you get up and ask a question like that you don't research your problem more thoroughly.

MR. SPEAKER: The Hon. Member for Oak Bay.

MR. PHILLIPS: Well, I have a supplementary question.

MR. SPEAKER: After that?

MR. PHILLIPS: Yes. (Laughter.)

As usual, Mr. Speaker, the Minister of Public Works is all mixed up.

[Mr. Speaker rises.]

MR. SPEAKER: Order, please. I think I'm being unbiased by asking if he wants another question after his first question was apparently demonstrated to be totally unfounded. Now maybe the Hon. Minister of Public Works is unfounded, I don't know. (Laughter.) But I point out that, prima facie, the Hon. Member seems to have made a mistake.

[Mr. Speaker resumes his seat.]

MR. PHILLIPS: It's a simple, innocuous question to the Minister. I certainly didn't intend to disrupt the House or disrupt....

MR. SPEAKER: Well, you didn't do it, I'm sure. It wasn't your fault.

MR. PHILLIPS: No. My question is very well founded and, as usual, the Minister of Public Works is entirely wrong. He's all mixed up. He did fly a florist into the area to look after the arrangements when there were local florists there who didn't have the opportunity to bid. I'm just wondering why this extra cost.

[ Page 3291 ]

Yes, I wrote the Minister, Mr. Speaker. I wrote the Minister on December 31, 1974, and he hasn't given me the courtesy of a reply in five months.

Interjection.

MR. PHILLIPS: My question is as originally stated — and the reason the question period gets mucked up here is because this Minister uses the time of the House giving misinformation.

MR. SPEAKER: Order, please!

HON. MR. HARTLEY: Last time he said I didn't answer questions. This time he says I take too much time answering questions. You're very, very inconsistent, my friend.

MR. SPEAKER: Order, please! Will you get on with business, please?

HON. MR. HARTLEY: Yes. He's asked a further question. He's tried to insert a certain amount of innuendo and falsehood. We purchased the flowers locally from a local florist. The reason I didn't answer his question or answer his letter was that I thought he was pulling my leg. I thought if he was really serious he would raise the matter under my estimates. He didn't raise it under the estimates. Now, many months later, he raises it.

There is absolutely no basis to the inference that we did not buy our flowers from the local florist. It's the first time in the history of the Department of Public Works, either under the previous administration or this administration, that we've patronized a local florist.

Interjections.

MR. PHILLIPS: A further supplementary question, Mr. Speaker. I would like to ask the Minister once again — I'll say this very clearly: why did the Department of Public Works fly a florist in from the lower mainland...

Interjection.

MR. PHILLIPS: A florist is a person, not flowers.

...to make arrangements for all the floral arrangements during the opening of the provincial government building in Dawson Creek when there were local florists there who could have done the same job with as much expertise as any florist being flown in at extra cost to the taxpayers of this province? It's a very simple question.

HON. MR. HARTLEY: Mr. Speaker, the Department of Public Works has gardeners and florists, and we have a person who specializes in these openings. She attends all these openings, looks after the floral arrangements and puts on a first-class job for you. I'd like to say this, Mr. Speaker. These people like to imply political....

SOME HON. MEMBERS: Order!

MR. SPEAKER: I think the Hon. Minister is going beyond the question and answer.

HON. MR. HARTLEY: Up in Dawson Creek the mayor said: "This is the second occasion that I have been able to preside on this site with the Member." "The first time," he said, "Mr. Phillips stood with me in 1972 before the election as the MLA for the area." He wasn't the MLA for the area — Don Marshall was the MLA for the area!

MR. SPEAKER: Order, please.

HON. MR. HARTLEY: That was the way the old Social Credit Party used to play politics. They'd put their candidates in there instead of the sitting Member.

Interjections.

MR. SPEAKER: Order, please! Would Hon. Members please direct themselves to the answer to the question and not roam around in their speeches?

MR. PHILLIPS: In all fairness, Mr. Speaker, I think you should demand that the Minister of Public Works apologize to me because first of all he got up and said he didn't fly a florist in, and he just finished stating that he did. I think, in all fairness to your Grace, that you should ask that Minister of Public Works to apologize because he said that I lied to him. I did not lie; I had my facts straight. He said I didn't do my research. In all fairness, your Grace, you should ask the Minister of Public Works for an apology.

MR. SPEAKER: Order, please! You leave me alone! I can't run a House this way with you attacking me all the time. It just can't be done!

Interjection.

HON. MR. HARTLEY: From a local florist. If he wants to twist that around, I guess that's up to him. In the past, we have not only flown in the person to display the flowers and to decorate, but we've also flown in the flowers. In this particular case last year when we opened the court house in Dawson Creek we bought the flowers locally from one of his businesspersons. I thought he would have appreciated

[ Page 3292 ]

that. I thought he would have researched that a little better. When I read it in the letter, I thought he was trying to put me on. If he's really serious, he'll raise it during my estimates. But if he didn't raise it during the estimates, he's raised it now.

MR. SPEAKER: Order, please. I would like to recognize the Second Member for Victoria (Mr. D.A. Anderson).

CASA LOMA INVESTIGATION

MR. D.A. ANDERSON: Mr. Speaker, I am pleased that the 75 Girl Guides introduced earlier have had the advantage of a typical day in the Legislature.

I would like to ask the Attorney-General whether he could inform the House whether the RCMP fraud squad which looked into certain aspects of the Casa Loma affair has yet reported.

HON. MR. MACDONALD: There's no report to date, Mr. Speaker.

MR. D.A. ANDERSON: A supplementary question, Mr. Speaker. May I ask the Attorney-General in view of the date that is past due for the government to take over the Casa Loma complex, if he has asked that certain government moneys which should be paid to the developers be held back so that in case the fraud squad comes up with any evidence that the subcontractors are entitled to more money there will be money available?

HON. MR. MACDONALD: Mr. Speaker, I would think that what you're asking now is a civil matter governed by the civil laws and the contract in question. My investigation was to see if there was commercial fraud. I couldn't intervene and change a court order. That would be subject to court.

ICBC STRIKE

MR. G.B. GARDOM (Vancouver–Point Grey): A question to the Minister of Transport in his capacity of major domo for ICBC, Mr. Speaker. Since the automobile insurance is compulsorily imposed in this province, but is not being effectively processed, and since the employees of ICBC have indicated that they are desirous of bringing pressures to bear in certain spin-off services in the private sector, which could result in considerable, and I'd say unnecessary and very unfair hardship, is the Minister now prepared to recommend compulsory arbitration to end this work stoppage and bring this monopoly back into operation?

HON. MR. STRACHAN: I think the Member is fully aware that there are laws governing labour relations in the Province of British Columbia.

MR. GARDOM: Supplementary to the Hon. Minister. If there is to be ICBC picketing of spin-off services — say repair shops or insurance agents — is the government prepared to intervene and prevent that occasioning?

HON. MR. STRACHAN: As I indicated earlier, there are laws governing labour relations and those affected by them in the Province of British Columbia — passed by this Legislative Assembly.

BUS FARE PASSES

MR. G.S. WALLACE (Oak Bay): To the Minister of Municipal Affairs. With regard to recent changes in the busing arrangements between Victoria and Sooke, particularly, where B.C. Hydro buses have taken over from the services of Southwest Coach Lines, and with regard to the fact that monthly passes of $34 were previously available to passengers who are now being charged $1.30 each way, has any decision been made to reintroduce the monthly pass for $34?

HON. J.G. LORIMER (Minister of Municipal Affairs): The whole question is under review. The problem is that we are operating a provincial system of transit. If we are to supply a pass at possibly half-price for the people in Sooke, it would seem only reasonable that those in Sidney and those in White Rock and every other area of the province could ask for the same thing. The only area that did have this privilege under the original operator was in the Sooke area.

Now the rate that we are charging at the present time may be a little higher than it will be when we can review the whole thing completely, because per mile they are a little higher, I think, than they are to, say, Sidney or Saanich. So there might be some relief there. But as far as the continuing with the pass system that they did have, I think it is a very difficult thing to do under a provincial scheme.

MR. WALLACE: A supplementary, Mr. Speaker. On that point about it being a provincial service, I would like the Minister to confirm that federal employees, such as the Members of the work force of the Canadian Post Office, travel free on the buses. I wonder if the Minister could tell us what arrangement the provincial government has with the federal government to be reimbursed for this service, or, in fact, is the provincial taxpayer subsidizing services provided by the federal government?

HON. MR. LORIMER: I'll take that as notice.

[ Page 3293 ]

DISBURSEMENT OF FUNDS
BY DEBT COUNSELLING SERVICE

MRS. P.J. JORDAN (North Okanagan): Mr. Speaker, my question is to the Minister of Consumer Services regarding the B.C. debt counselling service. Could the Minister advise the House just what becomes of the funds that are collected monthly by this service from consumers on behalf of creditors? It would appear they are handling approximately $100,000 per month around the province, which would make approximately $102 million per year.

HON. P.F. YOUNG (Minister of Consumer Services): Mr. Speaker, I am very pleased the Hon. Member asked that question. They are distributed to the creditors of the debtors and we are thereby putting back into the economy of the province about $1 million per year that would not otherwise go back into the economy.

MRS. JORDAN: A supplementary. I appreciate this fact, Madam Minister. I think you misunderstood. What process is utilized in the handling of the money? Does it come directly to the debt counselling officer? Is it deposited in a bank? Or is it paid directly to the creditor? This is what I would like to know.

HON. MS. YOUNG: Mr. Speaker, it's done in several ways. In some cases it is done voluntarily by the debtors themselves, and they distribute a portion on a percentage basis to each creditor. In other cases it is paid into our debt counselling service, into an account. We have a computer that is programmed to write cheques and these funds are then disbursed to the creditors on a percentage basis.

MRS. JORDAN: A further supplementary. Could the Minister advise the House if there is a fee charged from the creditors who receive the benefit of this counselling service to help their business?

HON. MS. YOUNG: There is no fee.

MR. PHILLIPS: I would like to ask the Minister if the funds are discharged on the same basis to secured debtors as well as unsecured?

HON. MS. YOUNG: They are distributed according to an agreement reached between the creditors and the debtors and our debt counselling people, or where the court is involved, as the court so directs.

MR. PHILLIPS: Am I to take it that all creditors or debtors, whichever side you are on, are treated equally? Or are secured claims paid out on 100 cents on the dollar while unsecured claims are not?

DREE PROGRAMMES
FOR NORTHERN B.C.

MR. SMITH: My question is to the Minister of Economic Development. Has the Minister finalized the renewal of the DREE agreement between the Province of British Columbia and the federal government relative to specified programmes in northern B.C. as yet?

HON. G.V. LAUK (Minister of Economic Development): Mr. Speaker, it is not a question of renewal. These are totally different agreements from the old Incentives Act, which is still in force in the Kootenay region and other designated areas of the province and has been in force continually. As far as the other agreements are concerned, I hope to have announcements in due course, within the next several weeks.

Orders of the day.

HON. E. HALL (Provincial Secretary): Mr. Speaker, I would like to advise the House that we will be doing second reading of bills 94, 107 and 125 for the Department of Mines. That will be followed by either Attorney-General's bills, second reading of 96, 99, 100, adjourned second reading on 93, or, if the Premier returns from the lower mainland, we will be going instead to Finance, to second reading of Bill 129, continued debate on 27. I'm not entirely certain which of those will come first.

In the case of the Attorney-General, he has just indicated to me that he would prefer to go into 93 first. It was adjourned and he'd like to go into it.

So I call then, Mr. Speaker, second reading of Bill 94.

COAL MINES REGULATION
AMENDMENT ACT, 1975

HON. LT. NIMSICK (Minister of Mines and Petroleum Resources): Mr. Speaker, in moving second reading of this bill, it's going to be a very few words because the bill involves, really, just two principles. One is safety and the other one is reclamation.

In regard to safety, we deal with certain metal alloys — light metal alloys of aluminum, magnesium, titanium — that have got to be kept away from the face so any chance for a spark might not create an explosion. We also increase the power of an inspector to require a plan of what is going on in the mine, and a notice to the inspector before driving a new shaft stope or an adit.

In regard to reclamation, we're changing the maximum amount you can ask for in a bond from

[ Page 3294 ]

$500 per acre to $1,000 per acre.

There is also training in survival and rescue for all underground workers.

That's the gist of the whole bill. As I said, it's two principles: safety and reclamation.

MR. G.F. GIBSON (North Vancouver–Capilano): This bill will be better dealt with in committee to a certain extent. I can't quite agree with the Minister that there are only two principles in it, those of safety and reclamation. Certainly those two principles are embodied in this bill, and naturally everyone is going to be in favour of greater safety and greater reclamation. I'd ask the Minister when he closes the debate if he could give us a little further justification for the increase from $500 to $1,000. How much does he believe in ordinary circumstances it costs to reclaim an acre in various areas around the province? What will be the practice? Will the new limit of $1,000 habitually be asked for, or will something less be asked for when the terrain so justifies?

After that we move to another principle of the bill, which the Minister didn't speak of, and that is the principle which suggests that the Mines department will henceforth have much greater control over the way a mine is developed and operated. You will find that, Mr. Speaker, in sections 3(4) and 3(5), which, in fact, change section 7 of the Act that is being amended. Those sections commence to bring into British Columbia law the husbandry concept, which has been experimented with in Manitoba in a particularly strong form in the bill which was advanced last year and withdrawn and replaced by their current Bill 16.

This, in effect, gives the chief inspector, and through him other officials of the department and, presumably, the Minister, the rule to dictate in very precise ways the manner in which a particular deposit shall be developed and exploited, ways which may not necessarily have any strong connection with economics, though I would suggest it's probably easier in the coal area than in the hard rock mineral area. We'll be getting on to that in a later bill we'll be discussing today.

I'll simply ask the Minister, before he sits down, to explain to the House why this important new power is felt necessary for his department. I suggest to him that subsections (4) and (5) are not powers related either to safety or to reclamation. I would like to hear more from the Minister on that.

MR. SPEAKER: The Hon. Minister closes the debate.

HON. MR. NIMSICK: Mr. Speaker, I don't know whether it's section 4 he's talking about, or subsections (4) and (5).

MR. GIBSON: Subsections (4) and (5) of section 3.

HON. MR. NIMSICK: Subsections (4) and (5): the only connection we've got with the mine is the inspector. He's the one man that has the right to go into the mine and inspect the mine. If there are any changes necessary, he's going to make them. As far as the maximum recovery of the coal is concerned, if he should see that the mining is not done in a proper manner, then he could inform the company or report to the department.

The safety question is predominant now. In regard to the $500 and the $1,000, I doubt very much in many cases that you could really reclaim for $1,000. The $500 has remained since 1968. It doesn't necessarily mean that we will request $1,000 in every case. In some places it may be quite easy to reclaim; it wouldn't cost $1,000 and they wouldn't be bonded for that amount. That is the maximum amount that is asked for. I hope that answers the question.

MR. SPEAKER: Do you move second reading?.

HON. MR. NIMSICK: I move second reading of the bill.

Motion approved.

Bill 94, Coal Mines Regulation Amendment Act, 1975, read a second time and referred to Committee of the Whole House for consideration at the next sitting after today.

HON. MR. HALL: Mr. Speaker, second reading of Bill 107.

PETROLEUM AND NATURAL GAS
AMENDMENT ACT, 1975

HON. MR. NIMSICK: In moving second reading of this bill, it has a few principles in it. We expand the definition of "petroleum" to include "oil sand and oil shale." It is considered that the previous definition may have been interpreted to include that, but we wanted to make sure that it included oil sand and oil shale.

Then there are some housekeeping amendments. The plan for drilling and the reclamation clause are part of these. In regard to reclamation, they have got to have a permit and an application for resuming. If they shut down their drilling, they have got to make application to resume after a certain length of time.

I move second reading now.

MR. D.M. PHILLIPS (South Peace River): There are some far-reaching principles involved in this bill, but they are under specific sections. I think we will

[ Page 3295 ]

spend most of our time on it in committee stage.

MR. GIBSON: Mr. Speaker, there are indeed some far-reaching changes in this bill. The Minister mentioned the redefinition of oil shales. I think that is a useful addition to our mining law. I would ask him if, in closing second reading, he might outline to the House what shale deposits in what parts of the province would be particularly covered by this section. I know there is something up in the Queen Charlotte Islands — perhaps the Minister could describe that property and anything else there may be around the province to which this would apply.

Far more importantly, Mr. Speaker, a section of this bill, section 7, which I don't intend to debate at length now but must be debated at great length in committee stage, gives the Minister the power to withdraw Crown lands from the ordinary process of disposition, and thereafter deal with them pretty well as he sees fit.

I don't want to misquote the Minister on this, but I think he was asked at the time this bill was first introduced if this would not, one way or another, allow Crown drilling, or facilitate Crown drilling. It seems to me that it unquestionably would. It would make it very simple for the Minister to select any parcel of land in the province, remove it from the ordinary competitive process of getting permission to drill, and have a Crown company such as B.C. Petroleum Corporation go ahead and do any exploration work they might wish.

Now Mr. Speaker, it very well may be that because of the economic philosophy of the present government, ordinary drilling, drilling by private companies, is not going on in this province to the extent that the government might wish.

Interjection.

MR. GIBSON: The Attorney-General says that is not so. But clearly, were it not so, would the B.C. Energy Commission be holding the hearings they are right now as to whether the returns to natural gas producers are sufficient to encourage the kinds of drilling that we think are required? So the Attorney-General is going off a little half-cocked again. He seems to be in that mood this afternoon, going off a little half-cocked, and he is still at it. This section does give the Crown that power. It is an important departure, Mr. Speaker, an important departure of principle in our mineral resource policy in this province.

Ordinarily, the economic development of hydrocarbon resources proceeds on the basis that economics are respected. If the driller or would-be producer feels that a particular area is of great value, he pays a high price to the Crown to acquire that. Because he pays that high price, he goes out and he drills it as expeditiously as he can and he puts a lot of work into it.

Now if a Crown corporation is to have the benefit of Crown lands for exploration virtually gratis, that removes an important economic incentive for efficient exploration. If this Crown agency, whatever it may be, has available to it virtually all of the potential drilling lands of British Columbia, it may not feel constrained to pursue drilling activity as quickly as private companies might have done. This may particularly be the case if there are budgetary problems in any given year, when the government might find that one of the easier things to cut back on is, not established social programmes, but rather drilling programmes — things which are essentially postponable in the budget of the government, but which would not be postponed were they being done in private hands.

It strikes me as bad economics, Mr. Speaker, unless the Minister has some formula to provide whereby any Crown corporation engaged in exploration activity could somehow be made to answer to the same kind of incentives for the wise and effective use of capital as private companies are automatically constrained to do by the marketplace.

As I say, I hope to discuss this further at committee stage, but when the Minister closes second reading, I hope he will have something to say about this very important departure in resource management in British Columbia.

MR. D.E. SMITH (North Peace River): I just want to say a few brief comments on this particular bill, and I agree that it can best be debated in the specific sections that are included.

It would seem to me that one of the intentions of the bill is to define oil-bearing shale as the same type of mineral as any other in the Province of British Columbia. It's a petroleum, yes — a petroleum-producing shale. That was probably included at this particular time with the intent of circumventing, or at least cutting off, some of the people who have exploration rights on the only known shale deposits in British Columbia at the present time — in the Queen Charlotte Islands.

It will probably effectively retard any programme of exploration and development they may have had in mind until they find out exactly what the Minister is going to do in this respect. It may, Mr. Speaker, retard indefinitely and for many years any development of the shale deposits in the Province of British Columbia.

There's also a reference been made to section 7 by the two previous speakers. I'm concerned about section 7. I think the Minister should really reconsider what he's doing, because I say that if he enacts section 7 as it is written, he will effectively scuttle the exploration for petroleum resources by anyone other than a Crown corporation in the Province of British Columbia in the same manner that we've seen the mining exploration die in this province.

[ Page 3296 ]

You can shake your head all you like, Mr. Minister, but that's exactly what's going to happen because what you have done is reserve to the Crown, whenever they shall desire or whenever the Minister shall say, any potential area for exploration.

Now no company seriously concerned about exploring for natural gas in the Province of British Columbia, or oil — because you can't really explore for one without the other; you don't know what you will find, if you find anything — will even be able to raise one dime's worth of finance to finance the exploration, which is costly, and the drilling, which is costly, if it is known by the market generally that the Minister reserves the right to move in whenever he desires. That's exactly what you're doing in this particular section of the bill.

HON. A.B. MACDONALD (Attorney-General): You haven't read the bill.

MR. SMITH: Yes I have, Mr. Minister. I've read the bill. It's very plain, and it will be very plain to the industry what you have in mind, and that is that if we find a new wildcat area in British Columbia which seems to have potential for development, the Crown can move in in that particular area. The Crown can reserve it out for themselves.

Interjection.

MR. SMITH: Yes, either way you are scuttling the exploration business and you're going to high-grade the petroleum industry the same way that you have accused other people of highgrading the mining industry. That's exactly what you're involved in, and it will be to the detriment of the continued exploration for natural gas and petroleum resources in the Province of British Columbia. It's ridiculous, it's ludicrous, at a time when we need petroleum resources more than we've ever needed them before in Canada, that you should introduce this type of bill into the House.

We have the Energy Commission presently meeting in the Province of British Columbia, discussing some of the problems of exploration and production of petroleum. And what do you do? You effectively cut off anything that they might have productively been able to do through these hearings before the hearings have ever been completed. You've emasculated any effect the Energy Commission will have. And you might as well forget about any report they'll introduce, even though they suggest that there could be and should be an increase in the wellhead price for new and perhaps for old natural gas — whatever their recommendations might be. I'm not going to speculate on that.

We're in intense competition for exploration with the Province of Alberta. And I mean intense, Mr. Minister. The facts of the matter are that in a like zone — and I'm talking about northeastern British Columbia as compared to northwestern Alberta — the costs of exploration are lower by a substantial degree because, first of all, the reef-formation where you find gas and oil is substantially shallower in the west as compared to the eastern area next to the mountains. So they can explore there much more cheaply than we can in British Columbia. The rate of return to the Crown is more equitable in that province. So that's an incentive to go out and drill. And all I've got to suggest to the Minister is to look at the reports of the continual increase since 1972 in exploration and development and drilling in northwestern Alberta.

In a comparable area, acre for acre comparable to northeastern British Columbia, their graph has gone up like this.

AN HON. MEMBER: No, it hasn't.

MR. SMITH: It has! It has, Mr. Minister, it has. Take a look at the report. And our graph has gone down like this. Take a look at the number of feet of actual drilling that has taken place. I'm telling you what's going on. Take a look at it. Take a look at the figures.

Mr. Minister, talking to you is really a waste of time. I appreciate and acknowledge the number of years you have spent in this Legislature as a Member. But I tell you this: as long as you take your instructions from Hart Horn, this province is in serious trouble.

HON. MR. NIMSICK: I take my instructions from this House.

MR. SMITH: I'd like to believe that, Mr. Minister. Unfortunately, I can't. There's one man who runs the department for you...

HON. MR. NIMSICK: You told me the other day Bob Williams is telling me what to do.

MR. SMITH:...and his name is Hart Horn, unfortunately for the people in the Province of British Columbia. Unfortunately for the people in the Province of British Columbia. It would be much better, with as little knowledge as you do have of the petroleum business, if you ran your own department. It would be much better for the people in the Province of British Columbia.

But this bill we have before us will result in exactly the same trend and the same pattern that we see and have seen develop in the last two years in the mining exploration business in this province. What you're doing is guaranteeing that the private companies will not drill in British Columbia. You're

[ Page 3297 ]

guaranteeing it with this bill. As much as I had hopes for the hearings of the Energy Commission, those hopes have been shattered with this bill before this House, at a time before those hearings have been completed and before that Energy Commission has even had an opportunity to report to the government their findings and their recommendations.

It's a disgrace, Mr. Speaker, that this bill could be before us at this time. If you had one ounce of concern for the people in this province and their revenue and the potential development of that resource, you would have at least waited until the findings of that commission were complete and we had a report back before the House as to how to proceed in the Province of British Columbia. This is part and parcel of a programme that will scuttle northeastern British Columbia.

Believe me, the people who live there look with great disfavour at this particular type of legislation. They know what it means to many hundreds of small businessmen, contractors and people who have for 20 years made their livelihood by working in extreme conditions in an area of British Columbia where the work year is compressed into three to three and a half months of weather conditions of anywhere between zero to 60 below. They go out and work in those conditions because they have an opportunity to not only produce the natural gas that we need for this province and for export and give the Province of British Columbia the opportunity of rip-off profits, but they do it because they can make a living for themselves and their family. They're proud to do it; they're an elite group of people, not the namby-pamby types who won't take a job unless all the t's are crossed and the i's are dotted and the contract is that long. They work because they take pride in what they do and what they know and what they've learned from experience garnered over 20 years in an extremely difficult type of business. Yet they have to live with a government that is so greedy that they won't even wait till they get a report from their own Energy Commission before they take another big bite. To me, Mr. Speaker, it's ludicrous, because it's obvious the government does not understand the economics of any developing industry in the Province of British Columbia. That's a sorry comment; I hate to have to make it on the floor of this House. It's a sorry comment, because that's exactly the position of this government today. No one in the Province of British Columbia should be deceived as to the true intent of the government: it's complete takeover of the industry. When that happens, we won't even have enough gas produced in British Columbia for our own consumption, let alone windfall profits from the sale of gas to the United States.

HON. MR. MACDONALD: Mr. Speaker, the Hon. Member is all wrong about this section because the section is consistent with the government listening to the recommendations of the Energy Commission, both as to price or method of exploration, drilling and development of properties. It does allow the government to reserve from the option system parcels of land — not to invade the existing leases. If the government considers that a private company won't develop an area that has a rich potential, then perhaps it might be done under this section by that not being put up to auction. It can be contracted out to a private drilling company. It can be managed or disposed of on contract, on incentive or even by direct drilling. But it doesn't have to be.

The government, of course, is listening to the Energy Commission and awaiting its report, which, I hope, should be available about the month of August.

Nor should the Hon. Members be so gloomy about the natural gas potential in the drilling of the past year. Our success ratio in new wells drilled has been higher than that of Alberta. Admittedly, it's easier to explore in Alberta and they have a bigger potential. But at the present time in history, our success rate is better. The fall-off in drilling — and there was some fall-off along with a general depression....

MR. SMITH: Why has it gone down?

HON. MR. MACDONALD: We have not gone down as much as either Alberta or Saskatchewan in terms of drilling. There has been some fall-off — of course there has.

MR. SMITH: That's not true.

HON. MR. MACDONALD: Well, it is. I gave the figures some time ago and I'd be glad to repeat them for the Hon. Member. But what you are doing is....

Interjection.

HON. MR. MACDONALD: You're a crépe-hanger.

MR. SMITH: Compare it.

HON. MR. MACDONALD: You're a crépe-hanger. I'll give you the exact figures on a....

Interjection.

HON. MR. MACDONALD: If I'm here at the committee stage of this bill, I'll be glad to give you the exact figures. I thought I already gave them to the Legislature in my estimates. Look in Hansard. Our record is pretty good. We've piped another 40 million cubic feet per day of gas in the first quarter of this year into the system — not as good as it might be, but not bad either.

[ Page 3298 ]

So we can under this section listen to what Dr. Thompson will recommend as a result of his hearings. It does give the government and Dr. Thompson an additional method and option in terms of and accordance with the best conservation practices in developing our oil and natural gas reserves.

MR. SPEAKER: The Hon. Minister of Mines closes the debate.

HON. MR. NIMSICK: Mr. Speaker, listening to the Hon. Member for North Peace River (Mr. Smith)...they always say that if you don't know your subject very good, shout loud.

Interjection.

HON. MR. NIMSICK: That's exactly what happened in this case, because I don't think he understood what we are aiming at.

First I will reply to the Hon. Member for North Vancouver–Capilano (Mr. Gibson), who spoke about the shale. The only oil shale we're short of is in Queen Charlotte area. We wanted to make positive that it came under the same requirements as all other oil; that's the reason we brought that amendment in.

In regard to section 7 that the Hon. Member for North Peace (Mr. Smith) was so concerned about, first I would like to state that I've got some of the finest men working under me of any department in the government. You just got through telling me that somebody else was making the policy, but I do. This was the first thing when I first became Minister — I had a big discussion about this question of drilling, and somebody said that the Crown should not have the right to drill on their own property unless they put it up for option and paid in the same way as the other parties.

Now this seems rather ludicrous to me — to pay to drill on your own land. When Shell Oil or Imperial Oil or Pacific Pete bids at these sales, they get hundreds of hundreds of acres under their control. They don't do the drilling; they farm the drilling out to some private drilling company. They contract it out for 50 per cent....

Interjection.

HON. MR. NIMSICK: No, they don't pay a thing. The drilling company goes in on their own for 50 per cent of the oil. If they find anything 50 per cent goes to the drilling outfit. Quasar will tell you. If you ever sit down with Quasar and talk it over, they'll tell you how Shell people and these other people farm out their property to them to drill. If they strike anything, Shell gets 50 per cent of the return.

Now why shouldn't, if it was necessary.... I don't know whether this section will ever be used because I think that the private industry will continue to do the job the way we expect them to do it, for the simple reason that if it was necessary to use it, we can use it. If the Crown wants to do their own drilling, or if they want to contract it out, they should have the same right as any private oil company in the country.

It surprises me to hear the opposition so many times say that the Crown, the people who own the property, haven't got the same right to do with that property as a private company has when you give the property over to them. To me, it is a rather ridiculous situation. I'm sure that, although this is in there, it probably will not be used, as I say. Nevertheless, if the opportunity comes, or the time comes that we should do it ourselves or contract it out to some drilling outfit, we can do it.

I move second reading of this bill.

Motion approved.

Bill 107, Petroleum and Natural Gas Amendment Act, 1975, read a second time and referred to Committee of the Whole House for consideration at the next sitting after today.

HON. MR. HALL: Mr. Speaker, second reading of Bill 125. This will be followed by adjourned debate on second reading of Bill 27.

MINES REGULATION
AMENDMENT ACT, 1975

HON. MR. NIMSICK: This is a companion bill to the Coal Mine Regulation Act, except that the question of the light metal alloys and the chance of an explosion is not in this bill. But the inspector has the same powers; the increase in security for reclamation is the same; and the principle of safety is quite evident in it. Also, placer mining will come under the inspector who will have the power to look after placer mining in the province as well as hardrock mining.

MR. F.X. RICHTER (Boundary-Similkameen): Bill 125, as the Minister says, is a companion bill to the Coal Mines Regulation Amendments. In studying the bill, outside of one or two points in which fees have been increased — and this can be more properly debated in committee — I would say that the powers within this bill have already been at the disposal of the Minister through Bill 44 and other amendments to the Coal Mines Regulation Act. The thumbscrews are turned down a little tighter. It can be a little more difficult for small mines to comply with some of the provisions within this particular amendment to the Mines Regulation statute.

I'm just wondering if these types of bills are really

[ Page 3299 ]

necessary when the power is already there within the hands of the Minister, and that merely by bringing his inspection procedures up to a little higher standard, these things can be accomplished in that fashion.

I have no objection to legislation, but I wonder sometimes when broad legislation is drafted and promulgated, put before the House and passed, why the broad sense of the legislation is not used without fuzzing up the whole issue by bringing in measures such as we have had brought in here in Bill 94 and 125.

There is really nothing in here that we haven't had before. We don't intend to oppose this Act, but I question the wisdom of bringing these measures in, particularly those measures that are going to make it more difficult for the small mines, the people who are trying to start up, and also those who are going to find a great difficulty because of their economic returns from the mines in light of other legislation. I wonder whether or not this would not have been better left as it was, because we have plenty of protection as far as health conditions under other legislation, safety regulations (and goodness knows we want safety as far as mines are concerned), and as far as the additional imposts that are going to be brought about by this particular set of amendments. Really, I don't know where any encouragement could be evident within this bill that would make the mining industry more efficient, more interested in development. We will have more to say about it at the committee stage.

MR. GIBSON: Mr. Speaker, I take a rather serious view of this bill, in particular the new power which is granted which would allow the department to require that the mining system adopted should not be departed from in any substantial manner unless the operator should receive the approval of the chief inspector, and further that the plan of assistance should provide for the maximum possible recovery of the natural resource.

The second part of that is in direct conflict with the province's own royalty policy, as I will outline in a minute, but just let me talk about the first part for a moment. Let us assume that a mining operation has commenced. You could use most any metal, but let's talk about copper for example. Let's suppose a copper operation is commenced at a time when the price of copper is expected to be, let's say, 70 cents. A mining plan is filed according to this law from which the operator is not to depart in any substantial manner. Then let us say that the price of copper changes substantially — be it up or down, it doesn't really matter. If the price changes substantially, the mining plan should be changed as well. The grades that will be economic to take out with the price change will either go up or down according to the price of that metal. You can't go changing your mining plans every day. That is for sure. You get into an open pit structure when that is the way you are going through, and it is hard to change. But sometimes there are changes required for economic reasons to get the maximum possible ore out of the ground that is economic. This is must another restriction and another imposition of arbitrary, discretionary control on the mining operator by the Minister and his department.

Mr. Speaker, the discretionary features of the existing mining legislation have been one of the two things which have virtually brought an end to mining exploration and development in this province, and with them, several thousand jobs. Here is another piece of discretion. To that extent, it is another nail in the coffin of mining employment in British Columbia. There is just no question about it, Mr. Speaker: here is another way in which any mining operator will see his hands potentially tied by this government. It is another piece of "trust us" legislation. Anyone who wants to be productive in the mining business has no reason to trust this government and the judgment of this government. I will tell you that, Mr. Speaker.

The other thing to which I take exception is the conflict between the government's royalty policy and the requirement here that: "The plan of the system shall provide for the maximum possible recovery of the mineral resource in the location to be mined, having due regard for good engineering practice and the safety of the operation." Mr. Speaker, leave aside the safety of the operation — we are all in favour of that. Let's talk about the economics of the operation.

The royalty pattern imposed by this government is an off-the-top impost. If the Minister will have reference to any mining text, if he will have reference to the extensive debate that took place on Bill 31 in this House last year that apparently he had a deaf ear to, if the Minister will have reference to the mining department out at the University of British Columbia, if he will have reference to the B.C. and Yukon Chamber of Mines, if he will have reference to anyone who knows anything about mining they will tell him that a royalty is in direct contradiction to this section because the most efficient recovery of a resource will not take place when the tax on it is by royalty rather than by a tax on profits.

So, Mr. Minister, it's another proof that you and your department don't understand the industry. This very question of a royalty was covered by none other than Dr. Peter Pearse, who was rumoured as the new commissioner for forests — to look into the forest industry. When he was doing a report for the Minister of Lands, Forests and Water Resources (Hon. R.A. Williams) last year, he came out very clearly on this question of royalties, and how it leads to high grading of resources, inadequate and wasteful production, and bad conservation practices.

[ Page 3300 ]

I would have thought that Members of this government would be for good conservation practices, and would be for the maximum extraction of ore from the ground. They claim to be for it here in this very bill, and yet it contradicts the fundamental taxation practice they're following.

So there's an internal contradiction as point No. 2, and I return to point No. 1. It is an additional and important item of arbitrary discretion in the hands of the Minister which will simply go a little bit further to make it difficult for the advancement of mining employment in British Columbia. It's a little harder to slide further back than zero, to slide further back than drilling activity being down 99 per cent in the first quarter of 1975 over the first quarter of 1974, but this bill will just make it a little bit harder to pick back up again. It's a bad bill; I'm going to oppose it.

HON. MR. NIMSICK: I'm amused at the Hon. Member for North Vancouver–Capilano because I like him very much, and I don't know how he mixes up the royalty bill with this bill. I don't hear him criticizing the private industry for collecting royalties from each other, and telling them that they're not carrying on good conservation policies. I don't think that that is the best, but the inspector is the one who will have a little more power, because safety depends upon the inspectors. I think the Hon. Member for Boundary-Similkameen (Mr. Richter) knew when he was a Minister that the regulations were changed from time to time in order to improve the safety situation in a mine. I'm sure that he will recognize that fact.

In regard to reclamation, we've had problems with people exploring and ripping up the side of a mountain with a Cat without a permit. We say here that if he hasn't got a permit, it's an offence against the Act because now a person that explores for minerals with machines must have a permit to do so. This is something that I think the environmentalists at least would be very pleased with.

I move second reading of the bill, Mr. Speaker.

Motion approved.

Bill 125, Mines Regulation Amendment Act, 1975, read a second time and referred to Committee of the Whole House for consideration at the next sitting after today.

HON. MR. HALL: Adjourned debate on the second reading of Bill 27.

BRITISH COLUMBIA RAILWAY COMPANY
CONSTRUCTION LOAN AMENDMENT ACT, 1975

HON. D. BARRETT (Premier): Although I adjourned the debate. I'd like to yield my place to the Member for Cariboo (Mr. Fraser).

MR. A.V. FRASER (Cariboo): We're debating Bill 27, which raises the borrowing power of the British Columbia Railway from $450 million to $600 million.

To say the least, I was quite shocked about the speech that the Premier made on Friday in this House and the revelations that he made about the BCR. I can assure you, Mr. Speaker, that wherever that railway has served in the past, and where it serves today, they were equally as shocked.

I want to give a little history about this railway, and answer some of the accusations made by the Premier as president of the railway.

First of all, I have lived in Quesnel all my life and the BCR has serviced that community for that length of time. So I feel that I have a little knowledge about the workings of the railroad, I might say, Mr. Speaker, extending over a period of 40-odd years. I have actually witnessed a lot of the development of that railroad, because it has happened, a great deal of it, in the interior of the Province of British Columbia, although it has happened other places as well.

The railroad originally commenced in 1912 and was incorporated as the Pacific Great Eastern Railway. We always had many names that the initials stood for. The initials were PGE and we had many names for it: "Pigs Going East — Prince George Eventually," and so on.

HON. MR. BARRETT: "Please Go Easy."

MR. FRASER: "Please Go Easy," right. I've forgotten them all now, but it was for some time quite the laughing stock of the entire province, and the interior was no exception. It was incorporated in 1912 to be a branch line to the Pacific Grand Trunk which was the line running from Winnipeg to Prince Rupert, which later became part of the Canadian National system. The incorporation included the B.C. government legislation to guarantee the railway and also provide a development grant. Builders of the railway were Stewart, Foley and Welsh, all Americans. Most of the initial financing came from Britain, which gave birth to the name Pacific Great Eastern. The British had a railway called the Great Eastern. Most of the British financing of the day was a spin-off to the greater sums of money which went into the Pacific Grand Trunk.

The railway was a political white elephant from the start. The main problem and reaction and the basis for the change in development theory in later years was the lack of freight to market the business. Both the PGE and the Grand Trunk went bankrupt in 1917. The Grand Trunk became part of the CN and the Pacific Great Eastern came under the ownership of the B.C. government; since then it's been the guarantor. The PGE had failed in its initial objective of connecting with the CN to run into Prince Rupert.

[ Page 3301 ]

Following the government takeover, the chief business of the PGE was passenger traffic from White Cliff to the area of the Lions Gate, and it participated in opening up this area with commuter transportation. In 1922 the PGE was completed into Quesnel, linking it with Squamish and creating the first opportunity for any real freight traffic, even though freight revenue at that point was still under $1 million a year. Passenger freight were taken up Howe Sound by Union Steamships to Squamish, where they picked up the railway for the trip to Quesnel. Mr. Speaker, I made many trips on that boat.

An eventual backhaul business developed hauling wood down to the coast for use at Woodfibre and Port Mellon. This freight business disappeared during World War II.

In 1949 the extension between Quesnel and Prince George was begun and completed in 1953. The Squamish to North Vancouver extension was begun in 1954 and completed in 1956. In 1955 the Prince George to Dawson Creek–Fort St. John extension was begun and completed in 1958. The latter construction of the O'Dell–Fort St. James extension and the Fort St. James–Leo Creek extension were both developed as branch feeder lines, mainly to provide service to the developing forest industry in the area.

A few observations, Mr. Speaker. Considerable attention has been given to the manner of accounting on the British Columbia railroad. When the government acquired the railway in 1917, it found the railway constructed in the cheapest possible fashion, and this was essentially the same case until the extension from Quesnel to Prince George was completed.

I'd like to comment here, Mr. Speaker, that of all the moneys from the public of British Columbia that have been put in there, and referred to by the Premier in his speech the other day, a great amount of this money went into the upgrading of the railroad from North Vancouver and Squamish through to Quesnel, because, in fact, it was a substandard grade and substandard steel and so on, and many millions of dollars have gone into the right-of-way that did exist, and that money has been put in since the 1950s, up until.... Well, even today it's still going on.

The original quality of the railway was 60-lb. steel and spikes that could be pulled by hand from the ties. In terms of what the B.C. government bought, its history with the railway has been of rebuilding the line from Squamish north.

For this reason, such things as labour and track laying have been associated with a capital cost rather than operating expenses. The upgrading has been synonymous with building.

Similarly, when new extensions were built, such as the O'Dell extension or the extension from Prince George to Fort St. John, they were initially built to specification of quality which related to anticipated traffic costs. At a future time when more traffic demanded a better rail line, the improvements were made and charged to capital costs.

When you analyse the development of the railway in terms of this programme, you can see that it makes sense.

This is now the system that the president of the railroad, the Premier, has decided to depart from — that is, the accounting.

He referred to the poor quality of the line between O'Dell and Fort St. James. It was built as a branch line, never anticipating the Dease Lake extension. It would have been only logical to the former manager of the railway that as revenues on that part of the line increased, the line would have to be upgraded.

I'd like to say here, Mr. Speaker, that even the CNR and CPR right today are continually upgrading their main lines, particularly in the Fraser Canyon and all the B.C. sections of the system.

MR. J.R. CHABOT (Columbia River): They never quit.

MR. FRASER: They never stop upgrading their main lines and branch lines.

MR. W.R. BENNETT (Leader of the Opposition): They abide by the CTC, too.

MR. FRASER: Yes, and I might say in regard to that remark, Mr. Speaker, this railroad, which was referred to by the Premier as not complying with the accounting procedures of the Canadian Transport Commission.... He didn't say that they did not have to comply, while the CNR and the CPR have to comply.

HON. MR. BARRETT: But they signed their audited report saying that they did.

MR. FRASER: They did not have to comply with the Canadian Transport Commission regulations.

HON. MR. BARRETT: But they signed the report saying that they did.

Interjections.

HON. MR. BARRETT: What do you make of that, Alex?

MR. FRASER: The Premier referred to the poor quality of the line between O'Dell and Fort St. James, and, as I said before, it was built as a branch line.

We understand that the new vice-president is

[ Page 3302 ]

advancing the argument to BCR customers that the philosophy of the railway under NDP is to provide a first-class railway to customers, and it is the responsibility of the government to subsidize the losses that will be created. The former government believed in providing the service of a development railway, but on a pay-as-you-go basis, so we certainly have a division of opinion there.

HON. MR. BARRETT: Why did they say in the annual reports that they were following the CTC regulations?

MR. FRASER: In the terms of the terrain that this railroad traverses, no railway in North America has had to face similar challenges. The grade climbing out of Squamish to Pemberton is the steepest encountered by any railroad in North America — just take a ride on it someday and look out of a window down to the Fraser River. The construction of the Squamish–North Vancouver section was considered the most difficult ever undertaken in North America.

I might say, in regard to that section, that while the Premier, as president, ran down everything that has happened to this railroad, he didn't mention some of the benefits that are accruing even today. I refer to his pride and joy and that of the ex-vice president of the railroad whom the president fired, the Minister of Labour (Hon. Mr. King). I refer to the Royal Hudson train.

I say to you, Mr. Speaker, that this is a very popular new venture for the railroad, and I congratulate the government for this. But I would remind them that it runs on the BCR tracks, and if that road had not been built and upgraded, the Royal Hudson train certainly could not have operated under the setup they used to have.

The other thing I would like to point out about the development of this railroad from 1952 to 1972 is the fact that it was the cornerstone of resource development. Resource development in the interior of the province grew by investment of millions of dollars, mainly in forestry and mining. I might say that if it wasn't for the policies of this government, the advancement would still be going on in these basic industries.

Referring to the extension up in the Dease Lake country, where the railroad is now presently under construction, it is quite right that it probably won't be a viable extension now because of the policies of this government discouraging mining, and to a great degree, forestry, because we have had no investment in the forest section to any degree other than what the government has invested since they were elected in 1972.

HON. MR. BARRETT: We ordered the trees not to grow, Alex? There's not enough timber up there.

MR. FRASER: Well, that isn't the information I got. The impression I got was that there was all kinds of timber up there. To add further insult to injury, the railroad is not even operating up there today where they have the track laid.

HON. MR. BARRETT: Yes, because you didn't try to negotiate with the Indians.

MR. FRASER: That is laying off hundreds of men, and that again is the management of the railroad. They haven't done anything about it and this has been going on for four or five weeks and there are hardships developing more every day.

HON. MR. BARRETT: Whose property is the railroad on? Did you negotiate with them before you bulldozed your way across it?

MR. CHABOT: Yes.

HON. MR. BARRETT: You did not.

MR. CHABOT: Yes.

HON. MR. BARRETT: There were no negotiations.

MR. CHABOT: Yes.

HON. MR. BARRETT: None.

MR. SPEAKER: Order, please.

MR. FRASER: Certainly it is my understanding that there were negotiations...

HON. MR. BARRETT: There were none.

MR. FRASER: ...but there wasn't a signature received.

HON. MR. BARRETT: You fumbled. So you built it without a signature, eh? Is that your excuse?

MR. FRASER: The BCR, Mr. Speaker, made its big step towards viability with the decision to extend from Quesnel to Prince George...

HON. MR. BARRETT: You are making a bigger mess out of it.

MR. FRASER: ...to create a connection which it did not previously have. The commitment was made under the coalition government but did not become a factor until the early 1950s. As a matter of fact, this was completed, as I said, in, I believe, 1953. Development then began in the Prince George area

[ Page 3303 ]

when lumber men realized the potential of the area...

MR. CHABOT: You've never been on a railroad.

MR,. FRASER: ...and the accessibility to markets that the railroad would offer in its competition to the CNR.

HON. MR. BARRETT: I worked my way up on the BCR — on a caboose, not on a luxury car like the former Premier.

MR. FRASER: I might say, Mr. Speaker, in relation to this, that prior to that the good people of Prince George and their industry and everything had only the CNR, and they had been gouged to death by high freight rates. But as soon as the BCR made the connection so that they had another route to water for their particular shipments of forest products, the CNR rates fell and the BCR — the PGE in those days — was the cause of a great expansion in that area.

There are a lot of communities that certainly became viable communities and weren't so prior to the era of 1952-72. I will refer to all the communities in the Cariboo, 100 Mile House, Williams Lake, Quesnel, Prince George, with a big increase in activity in their area. Then, of course, as we go north, new communities were created and new jobs for the people in them. I refer to the communities of Mackenzie, Chetwynd, and so On. Everything wasn't bad that happened between 1952-72 as the Premier tried to make out the other day.

HON. MR. BARRETT: You didn't tell the truth, that's all.

MR. CHABOT: Oh, look who's talking. Look who's talking.

HON. MR. BARRETT: Ohhh, yes!

MR. SPEAKER: Order, please. That's unparliamentary.

MR. FRASER: Because of these extensions and a decent railroad, and I refer particularly to Prince George south to water, which the communities along that line had never had before.... For the knowledge of people who don't know anything about the railroad — and I think this applies to the Premier as president — they had to barge all their freight from Squamish to North Vancouver and change it from the rail line to barges to finally get it to the world markets. This was costly. When the railroad was completed, this all ended and the trains could run directly down to seaboard to load on for the world markets.

I don't know how many millions of dollars were involved in this investment in the central and northern part of the interior, but the catalyst of all this was the BCR. Without it they had no way to get their products to market. There is probably an investment in excess of a billion dollars created because of the expansion of this railroad — which today are viable industries paying taxes, creating large payrolls. As an example, about 15 years ago the City of Prince George had a population of around 20,000. Today it has 60,000 people, all very gainfully employed. The same difference has happened to communities like Quesnel, Williams Lake, 100 Mile House and, of course, thousands of people in Mackenzie, and so on, and the new community of Chetwynd.

The other extension that had some discussion from the president and Premier on Friday was the extension into the Peace River. I don't have to relate that, Mr. Speaker, because there are other Members here who can relate it better. But I do know the only railroad they had was a railroad that ran to Alberta. They had no connection with the rest of British Columbia until the railroad was pushed north from Prince George into Dawson Creek and Fort St. John. This again gave competition to that railroad. For the first time, Peace River was hooked to the rest of British Columbia by rail. It made it so that those grain farmers could ship their grain down through the province. They had a market for it instead of feeding it to the pigs they had at home — which had been the only opportunity they had to getting rid of it before.

The refinery at Taylor was made a viable unit because of the extension of the railroad between 1952 and 1972. Really, in the 20 years involved, Mr. Speaker, this railroad did a lot to open up a frontier that was untapped until that time. It's still going on, but at a slower pace for the reasons I gave earlier.

It was done on a pay-as-you-go basis, rather than taking the position of this government that there are areas of service to industry which must be subsidized.

Another thing I would like to talk about for a minute is the operation that has been going on in that railroad since 1972, and which greatly disturbs all the interior people. One action alone by this government has caused problems. I refer to a bill put forward by the Premier and president — the bill that put a 5 per cent sales tax on all railcars.

This created an enormous headache for other railroads which interchange cars all the time with the BCR. Once a railcar leaves B.C., it must run on four roads before it gets back here. The imposition of the 5 per cent sales tax made it necessary for those other carriers to keep track of the cars and who owed how much sales tax on the out of province, et cetera. It was so confusing and created so much work that it became the reason why other carriers did not want to let their cars to get mixed up with the BCR cars.

[ Page 3304 ]

Consequently, Mr. Speaker, we continually have a shortage of cars on this railroad when we need them. When we need them the most in the interior is when the forest product market is good. This railroad never has any cars any more when the market is good and the demand is heavy on the world markets, more particularly the United States market. This, I feel, is one of the causes of the shortage. Their own system cars show up when there is a lessening of the market in the forest products like there is today. But as soon as....

I would say there will be another huge shortage in this railroad next spring, Mr. Speaker, because no doubt, the lumber market and the pulp market will improve because of it being a presidential election year next year. It has always happened; I have no reason to believe it won't come back. Then again they won't be able to get their product to market because of the shortage of cars.

Mr. Speaker, the other day the president made the following basic charges against the former government: accounting procedures which did not reflect the true operating procedures; lack of free engineering on the Dease Lake extension; no shake-up in management as charged. There is a considerable amount of evidence that Barrett's charges of scandal are not correct. Many of his statements are incorrect. He really recreated a smokescreen to cover up a $32 million operating loss in 1974, based on $48 million worth of business.

The matter of accounting procedures and capitalization of cost, as well as the depreciation formula, is a management decision. The Peat Marwick report clearly refers to this decision to change these procedures as a management decision.

HON. MR. BARRETT: Were the former methods acceptable?

MR. FRASER: As an example of the foregoing is the fact that the former administration charged track laying and labour to capital costs where the present government is charging it against operating expense. That's quite a change, Mr. Speaker.

If you examine back the records of this railroad, what the former government did is what was done in accounting practices right back to the start of the railroad. I would say that I think any one of us could hire another accounting firm and come up with the answers that we want if we're giving those kind of directions to them.

HON. MR. BARRETT: Would Peat Marwick be suspended by the accounting association?

MR. FRASER: No, but on the subject of Peat Marwick, I think they've got their difficulties right now in view of a problem they've had in the United States on a railroad audit. I think you should check into that, Mr. Premier.

HON. MR. BARRETT: Are you questioning theirs?

MR. FRASER: I'm not questioning yours. I'm just telling you that you're questioning the other auditors, and I'm telling you that maybe Peat Marwick have some difficulties as well.

HON. MR. BARRETT: I'm not questioning the auditor; I just quoted from his own association, that's all.

MR. FRASER: Of all the reports attached and referred to by the Premier, I would refer to the Wakely report where he was asked to make a report. By the way, Mr. Wakely was the engineer of the railway — the civil engineer. He was asked to make a report about the goings-on, although he had never been there when the action was taking place. I refer to 1963 to 1970. So in haste — in three months time, I believe — he made a report, and referred in his report to the fact that he had only had a short time available to him. So I'm not so sure of just how much accuracy is in the Wakely report, in view of the time he had and the fact that he was not connected with the railroad when the real action was going on.

HON. MR. BARRETT: Was there more than centre-line survey?

MR. FRASER: Mr. Speaker, this railroad now, I believe, is operational at around 1,500 miles of line into varying sections of the coast and on into the interior and the north of the province. In 1952 all it had was a railroad operating from Squamish to Quesnel, a distance of some 300-odd miles. I realize that it is a political issue, but I would suggest that this railroad has brought untold benefits to the people of British Columbia, not only in the interior of the north but also at the coast. Ask any businessman how much industry would have been there that he could service if it had not been for the expansion of the railroad.

I'm not clear, even after looking over these reports, just how much money we are talking about here. There's one figure of a deficit of $98 million, another operating loss of $40 million and so on. In any case this is over a period — as the Premier referred, if I recall — of 15 years, from 1957 to 1972.

Mr. Speaker, this government had an overrun of $103 million in the Department of Human Resources in the first four months of operation of their budget. You know, you want to smear people who try to do a good job; I think we'd better face up to the facts that we have before us now — not only Human Resources,

[ Page 3305 ]

but also ICBC. We have a loss of $36 million, looking at $100 million. How do they add up?

HON. P.F. YOUNG (Minister of Consumer Services): They didn't try to bury it.

MR. FRASER. How do they add up? I suggest that they really add up to a lot of money.

I might say that any money that has been put into this railroad...whereas they have a loss, and they have nothing to show for it. I refer to Human Resources and ICBC. There is something to show for the investment and loss in the operation of the BCR — they have track of 1,500-odd miles built and owned by the Province of British Columbia. You can go and look at it today if you wish. It's there. The money wasn't spent and nothing accomplished. Don't try to give us that guff. You can certainly find that out any time.

Before I sit down, Mr. Speaker, I'd like to mention a little about the existing operation of that railroad, about which I've talked many times, and about which I'm still quite concerned. I really don't know who's operating the railroad, and I want to tell you on behalf of their many thousands of employees, I don't think they know either.

The morale is not good on the railroad. I've said this before. I repeat: it is still the case. I imagine the cause of it is because of senior management leaving this railroad. And when I refer to senior management, I particularly think of Mr. Trask, the general manager. I understand that he doesn't want to talk, and I'm not going to say why. But I think we should ask ourselves questions: where is he, and why has he gone? He worked through the system of that railroad from an office boy to the general manager, and was probably one of the best men we ever had in that organization. Mr. Wakeley, the chief engineer, has gone. The thing that is concerning the people whom that line services is the fact that they don't know who is running that railroad. They are very concerned.

In other words, have these people been replaced? Are they going to be replaced? When are they going to be replaced? It is of grave concern to the people who rely on that railroad, which is their lifeline to the world markets. If the railroad keeps on operating on its own, which it seems to, there are going to be difficulties ahead.

I want to just mention one thing in closing. The Premier and president of the railroad made a great deal about derailments. Well, I'll tell you an example of derailments and mismanagement on that line right today. The railroad is recovering 31 log cars that went off the line in a derailment in the area of Kelly Lake below Clinton, some two and a half months ago.

It's my information that they called the tender to recover these 31 cars loaded with logs. The bidder came in at $98,000 for this job. The supervision of the railroad, rather than do that, decided they'd take the logs out themselves. To this day, I think they're working there, Mr. Speaker. This is what's going on on this line, and this concerns the employees. Instead of lifting these 31 loaded log cars by a crane and putting them on the tracks back to the coast, they are building a road down through a valley, and hauling the logs and the cars, then putting them on the track.

The point I'm trying to make is: where is the management in that railroad when these sort of things are going on? There's no wonder that the railroad can't make money when these kind of management decisions are being made.

We will ever know what that derailment will finally cost? I'm sure that the executive vice-president doesn't even know anything about it going on, but I tell you, the citizens of the interior know when there's difficulty with that railway, and they don't like to see these things happen.

I'd just like to say that we're all proud of the BCR and we were very upset last Friday when the Premier, as president, got up and tried to make political hay out of this railway, which is a vital source of transportation to thousands of people in the interior of the province. I don't think the lower mainland really understands that without the railway there wouldn't be any interior British Columbia today.

He's changed audits and that, and that's his right, but he's also changed the guidelines for the auditors, changed the guidelines for the types of roadbeds to be built, and the type of track to be laid. Certainly all these decisions cost a lot of money. I would remind you, in closing, that there will be upgrading going on on that railway long after this president and Premier is gone, as it is going on with the CNR and CPR today throughout all their sections in the Province of British Columbia.

MR. R.T. CUMMINGS (Vancouver–Little Mountain): I am pleased to rise to support Bill 27, the B.C. Railway construction loan Act. I felt a great shock when I realized that there is so much more money required for this railway.

We have to pass judgment on the railway's sordid past. The comptroller-general found little or no internal audit. There was no check on millions of dollars spent on construction. The CPR was built over 100 years with better bookkeeping and engineering practice. I am deeply shocked that chartered accountants wanted no records, civil engineers wanted no records, surveyors wanted no records, lawyers wanted no records, experienced businessmen should and would take part in building of a railway or anything. It will prove very dangerous to reputations. It was a form of cost plus — plus begging to the president of the railway.

No wonder W.A.C. Bennett coined the phrase "What is cheaper than free, my friends?" Friends of

[ Page 3306 ]

the Social Credit Party. Now you know why they compared him to Duplessis of Quebec.

J.S. Broadbent, vice-president, said he surveyed the route by helicopter personally. I can only guess the fairline profile was done probably after clearing. This procedure would be absolutely useless without cross-sectioning to determine quantities of soil to be moved, and a mass-haul chart to determine where the materials should be placed. This is elementary engineering.

I wonder why they wanted no records or plans? Why would civil engineers do this? They were trained and educated to build railways and roads the cheapest way possible. Why would they do this? Why would a contractor bid on such a job unless he had an understanding? Maybe this type of construction should be called blank cheque.

Now you know why the former Premier believed in the mushroom theory of government: keep the people in the dark and give them lots of manure.

A survey from the air would not determine the type of soil. For example, gravel is much in demand in the north and sometimes in the construction of a railway the road should be routed, if possible, to hit a large deposit of gravel, This would determine the quality and the cost of your roadbed.

Again, I can only stress to you the question: why would responsible contractors and engineers enter into such a business arrangement?

If a survey is done from the air, you cannot determine the size of a culvert, or the size of the watershed this culvert is required for. This is probably the most important thing in construction of a railway or a road: that the water can pass through without destroying the roadbed. You just can't do this from the air; you have to reconnoiter the whole area to see how this is done. The type of footings the culvert should be placed in: sometimes it is necessary, with clay, that you have to take the clay out and put gravel in so the culvert won't break and the water destroy the road. Failure of proper installation of culverts will result in washouts, derailments and, later, costs beyond belief — years of re-grading and ballasting of this track.

The constant nagging thought that I have is: why should millions of dollars have been wasted by the former government? I cannot hold the contractors on these projects completely innocent. They should have known it was wrong to build a railway like this —  or steal candy from kids. It will prove dangerous to their reputations, if they have any left.

There could be no estimation of quantity without preliminary cross-sectioning. You have got to know where the ground was before you can determine what was moved. Without cross-sectioning, which the railroad engineering management failed to do, nobody could figure out the true yardage. Why this was done only Mr. W.A.C. Bennett, the former Premier, knows. This fact alone should make all responsible people shudder at such engineering practice.

Mr. Bennett allowed too many people near the open till. The president of the railway, which he was, condoned it and hid it. He alone knows why he did this. Mr. Speaker, engineering reports have shown culverts were placed without collars to connect the sections. Mr. Speaker, there was no supervision at the installation of these culverts; probably the most important part of the construction was left unsupervised. For what reason? Why? Hundreds of washouts and derailments have been caused by this, and millions of dollars will be wasted.

Mr. Speaker, I have asked constantly through my speech: why? The only conclusion I can come to was that it was a Social Credit pork barrel, done with the knowledge of W.A.C. Bennett, who was not a financial genius or a wizard, but guilty of gross stupidity or worse. I would like to suggest to the government that a royal commission or a public inquiry into this scandal be made. For over 20 years that government was in power managing that railway.

MR. D.A. ANDERSON (Victoria): Mr. Speaker, the bill we have before us is one to increase substantially the borrowing of the B.C. Railway to make sure that cost overruns of past administrations and past years are met. It was introduced by the Premier last week, and in that speech of his he gave a great number of facts about the previous administration of the railroad and the present administration of the railroad, facts which were obtained by way of outside specialists and outside auditors — people like Swan Wooster and Price Waterhouse — looking into the previous years' activities. It was impressive material. I think that the auditing done by Price Waterhouse has only reinforced the need to have a proper auditor-general for the province. I suggest that had there been a proper auditor-general, the problems might not have arisen as they did.

One matter I would like to deal with right away, Mr. Speaker, is the question of losses. I listened with interest to the previous speaker. I was surprised that so few of his party were in the House. There were a few of us, but we are both here. But I was surprised that so few were here for what is such a major matter in terms of provincial development in northern British Columbia. I was particularly surprised that the Leader of the Opposition (Mr. Bennett) was not here. He has spoken out about an almost million-dollar profit. Apparently that did not take place in the last year of Social Credit. It turned out to be a more-than-$8-million loss. He talked about the resignation of the auditors being forced because they refused to cook the books, and it turns out that indeed the books were cooked — but previous to the

[ Page 3307 ]

new administration. He talked about political patronage. That is something about which there is apparently a great deal more to be said about the last 20 years rather than the last three.

There is one thing I would like to make clear at this time. That is that there are really two different issues at stake here. One is the question of overruns. One is the extra costs. I think we can all complain about overruns, be they from this government or the previous one. I think we can total them up, if you want, but I don't think it is a particularly profitable exercise. This government has had overruns — ICBC had $3.4 million; B.C. Ferries, $25 million; the overrun of the Human Resources department of $103 million; and there were overruns, of course, in the B.C. Rail which were outlined by the Premier. I think we have to put that aside. We can accept the fact these overruns have led to the bill and the need for more money, but we must put it aside when we start looking at such things as why the overruns were caused.

I don't think that the provincial good is really well served in attempting to draw comparisons which are not valid. Certainly there have been overruns which have occurred, but I wonder whether the overruns of the present administration (and certainly I have been here criticizing them fairly roundly over the years) have been caused by instructions given to auditors, as was done in the case of the B.C. Railway. I wonder whether their overruns have been caused by refusal to follow recognized engineering or accounting practices. I think we will deal with the individual overruns of the various departments — the Minister of Transport and Communications (Hon. Mr. Strachan's) department and other ones — on the basis of what caused them. But I think we should look at what caused the overruns in the B.C. Rail and not simply say that because there are overruns with the present government and there were overruns with the previous government, therefore they are all the same, lump them together, it is the pot calling the kettle black, ignore them because they are all much the same thing. It is not the same thing.

Interjection.

MR. D.A. ANDERSON: B.C. Hydro is another one, of course.

HON. MR. BARRETT: We have not hidden any information.

MR. G.B. GARDOM (Vancouver–Point Grey): Well, you haven't made much available.

MR. D.A. ANDERSON: The Premier has interrupted and said he is not hiding anything. I think that is a matter to be brought up at this time, Mr. Speaker. The fact is that it is the way these overruns occurred and how they occurred, as outlined by the Premier, which is the most worrying aspect of this whole matter.

We know that overruns occur. This government has had them, every provincial government has them and the federal government has plenty of them, too. We know this government is not the first; we know the previous government was not the first. They do occur and they should be legitimately criticized by the opposition on the strength of what they are. But when you find overruns caused by deliberate practices which are clearly wrong, you have something a great deal deeper which you've got to dig into.

I was surprised, because I thought that the previous administration's boasting about B.C. Rail would at least have suggested to them that the Leader of the Opposition (Mr. Bennett) should at least be present when his critic was commenting on this.

He spoke to the press last Friday and said very little. But there are matters here which are tremendously important in that the name Gunderson and the name Bennett Sr. have been introduced into the record; instructions by directors were given; lawsuits have arisen. Of course, we can't go into the actual lawsuits. Lawsuits have arisen and Mr. Broadbent is now engaged in a lawsuit where the provincial government has undertaken to pay his expenses in view of the fact that he was acting under instructions. So there is a very, very interesting and unsavory aspect to this aspect of the case, which I think we should go into.

Mr. Speaker, the documents that the Premier tabled indicated that the B.C. Rail has been badly run. That in itself is important. The public has a right to expect that the agencies of government will operate efficiently. This applies to this railway as well as other government services. But it appears that British Columbians, in addition to straight cost overruns, have been victims of a deliberate attempt to hide both the true costs and the financial mismanagement which took place in the building of the northern extension of the B.C. Rail.

In tabling this year's report of the railway, the Premier pointed out at some length that the railroad was using new accounting techniques as recommended by Mr. Minty, the comptroller-general of the government, who, by the way, served the previous government in that capacity for many years. In fact, at the present time, the new accounting procedures, which were pooh-poohed by the previous speaker, are essentially the accounting procedures which the previous government said they were following all along, said it on their audited statements and, in fact, were not following all along.

I listened with astonishment to his statement in that regard. Let me read to you, Mr. Speaker, from

[ Page 3308 ]

the Pacific Great Eastern Railway Co. statement of consolidated income, 1969, auditor's report — very brief.

"Report by Buttar and Chiene, chartered accountants, Vancouver, B.C., upon the accounts of the PGE Co. as of December 31, 1968.

"We have examined the balance sheet of the Pacific Great Eastern Railway Co. as of December 31, 1968, and the statement of the consolidated income for the year ending on that date and have received all the information and explanations required by us. The statements for the current year are prepared in conformity with the uniform classification of accounts prescribed by the Board of Transport Commissioners for Canada."

HON. MR. BARRETT: Not true.

MR. D.A. ANDERSON: That was not so. 1970 this exact same statement occurs; I have it in my hand. In 1972, the same thing; 1973, essentially the same thing: "The statements are prepared in conformity with the uniform classification of accounts prescribed by the Board of Transport Commissioners for Canada."

We have statement after statement, year after year which we were forced to accept because there was no other real way of getting at Crown corporations, even through the public accounts committee, even much later. At least there is some improvement there. We accepted those and they turned out to be false statements. That is a pretty shattering thing when you think about it, Mr. Speaker: audited statements put forward by a Crown corporation year after year — falsely put forward inasmuch as they did not correspond with the criteria that opposition Members of that time could accept on the grounds that it applied to other railroads in Canada. Therefore we assumed that there was reasonable hope that the present B.C. Rail or the previous Pacific Great Eastern was being audited properly. It did not occur. That is a major reason why a firm of chartered accountants has been suspended and why we're in the bind we're in today.

The former Premier constantly rejected opposition allegations about accounting procedures, but it now appears that the irregular procedures followed are revealed for all to see. Once again, it's most curious that the Leader of the Opposition is not here.

In addition to the terms in which the railway's financial statement was drawn up, the Minty report which was tabled in this House some time ago was highly critical of the internal auditing techniques of the railroad. As an example, it suggested that immediate steps were necessary to "investigate important discrepancies with recorded book inventory requirements." In other words, according to the Minty report, there were substantial differences between the material the railroad said it had and what it actually had in stock.

Mr. Speaker, I would only ask the Premier to tell us when he closes this debate whether that and the other recommendations of the Minty report have been implemented, because the Minty report, although it came in some time ago, was a very detailed one. I have it in my hand here now. It came in on April 5, 1973, and there was plenty of time for the government to have taken steps.

The Minty report, External Audit, section B says this: "According to the comptroller, E.M. Gunderson restricted the extent to which the external auditors could go in their auditing, with a consequent limitation of fees charged."

Fees charged for auditing the whole of the B.C. Railway Co. in 1973 are $324 million, yet the auditing figures are $4,100, an absurd indication of how little external auditing was done. That would just pay for a chartered accountant for a few days. If he had any staff at all, he could do the whole thing in less than a week with only that much money being provided. So it shows how little was done in the way of external auditing.

The Minty report went on to say that for at least the past 10 years the auditors have not reported on internal cost deficiencies in the company. The auditors did not obtain from the company for their files a financial management certificate covering inventories, payables, commitments, contingencies. The auditors attended at physical inventory counts at North Vancouver and at Squamish, but consider all other external on-site auditing to be an internal audit function while reporting that the company's level of internal auditing over the past three years has been minimal and of little or no value to them.

AN HON. MEMBER: Did they count the locomotives?

MR. D.A. ANDERSON: One wonders whether they counted the locomotives.

The Minty report goes on in great detail, and I want the Premier, when he speaks again in this debate, to indicate precisely how many of those Minty report recommendations have been implemented.

Mr. Speaker, I'd like to spend a moment on the Swan Wooster engineering study, and once again urge the Premier to recognize that these external studies indicate the need for an internal auditor-general in the Province of British Columbia.

AN HON. MEMBER: Hear, hear!

MR. D.A. ANDERSON: The Minty report and

[ Page 3309 ]

later the Swan Wooster engineering study noted that serious problems had developed in construction of the northern extension of the railroad as a result of a curious engineering practice in the BCR. In layman's terms, what happened was this: the railway simply didn't carry out engineering studies prior to commencing construction; they proceeded at the same time. Instead, the engineering work went on at the same time as construction, and a summary of the Swan Wooster Report indicates that this was in sharp contrast with normal practice.

The result was that the railway itself had no way, because they had no engineering work done, of comparing the different bids. They couldn't compare which tenders should be accepted. They couldn't tell which of the tenders actually reflected the amount of work being done. Nor could the bidders because they had no better engineering material than did the railroad. So the result was, in a bewildering number of cases, that enormous cost overruns occurred and had to be covered. In considering this, it is important to remember that, according to the Swan Wooster report, these overruns were not due to faults of the contractors.

Here's the Swan Wooster Report, Mr. Speaker, and on page 42 it says: "The apparent overruns are in no way due to poor construction practices or excessive payments to the contractors." So it appears that they were for something else again, and let's see what they were.

It's not just that the Dease Lake extension has cost us more money, as is the case in some of the overruns of the previous government and some of the overruns of the present government. It's not just the case of costing more money. The previous government, in fact, made a deliberate effort to conceal and mislead the people of this province into thinking the costs would be less than they ultimately turned out to be. Now under certain circumstances you could blame the railroad people for these problems, but I doubt whether anybody in the province would accept that at the present time. The workers in BCR attempted to do a conscientious job, but they were unable to because the board of directors of the railway and former Premier interfered.

Now I would ask you, Mr. Speaker, to consider the question as to why, in the case of the extension, did the previous government and the previous Premier act this way. With respect to the extension, I think the answer is obvious. The history of the former Premier as financial manager of this province is a tale of attempting to conceal the true financial state of the province from the people in the province.

We all remember the gala performance on Lake Okanagan where a flaming arrow was shot at a barge, a barge of bonds. It went out, and I believe an RCMP constable provided a lighter.

We had staggering per capita debt. We still have staggering per capita debt, yet the impression was given that somehow by transferring these to contingent liabilities, there was no debt at all. A straight attempt to conceal in this respect.

Interjection.

MR. D.A. ANDERSON: The Member for South Peace River (Mr. Phillips) says that I've never been on the BCR. Yes, I have, Mr. Member. Yes, I have and also the PGE before it.

In this case, Mr. Speaker, you're going to have to look for a moment or two about the more controversial and surprising contracts which were issued in the summer of 1972. At that time the former Premier, at a press conference in the north, announced a $250 million deal for coal. He had on the stage the man who is interrupting me, Don Phillips, Socred candidate and....

MR. SPEAKER: Are you complaining about now or then? (Laughter.)

MR. D.A. ANDERSON: He was there, Mr. Speaker, and he was interrupted by applause 15 times in the hour and a half that the Member and the former Premier were there.

HON. MR. BARRETT: Clancy was at work.

MR. D.A. ANDERSON: But, of course, four times that applause was started by the former Premier.

HON. MR. BARRETT: Old Clancy used to stand back and yell, "Fire!" (Laughter.)

MR. D.A. ANDERSON: So we have the Peace coal contract, talking about Sukunka coal. Now what happened to that? It was again political flim-flammery, designed to get....

Interjections.

MR. D.A. ANDERSON: It was political flim-flammery at the time of an election, at a time when it was clear from the results of August 30....

Interjections.

MR. D.A. ANDERSON: I believe the man who has the slimmest majority in this House is not commenting on how many votes....

MR. SPEAKER: Order! Order, please. The Hon. Member will be able to answer afterwards.

MR. D.A. ANDERSON: Mr. Speaker, the railroad was an area for boasting, and there was no desire by

[ Page 3310 ]

the former Premier to have the true cost revealed.

Now there are benefits, as was outlined by the Member for Cariboo (Mr. Fraser). There are benefits from BCR, no question about it. But when it comes to cost, there is certainly room for serious debate, and far more than we have had so far from the defenders of the former administration.

HON. MR. BARRETT: Hear, hear!

MR. D.A. ANDERSON: I think, Mr. Speaker, that we have here what is essentially the tip of an iceberg — more material will be revealed in an area upon which, obviously, I cannot comment without incurring your wrath, namely the fact of the lawsuit. I can't touch that. More material will come up from that about the operations of the BCR, one way or another.

There are some interesting observations in the Swan Wooster report. I think that it is worthwhile to have a look at some of the pages of that report.

This deals with contracts and unit work. It is page 16. Swan Wooster said:

"Inaccurate quantities used for tendering give the bidders an opportunity for bid loading. This is when the contractor guesses that the owner has inaccurate quantities on the bid sheet, and bids low on high-volume units and high on low-volume units, hoping that the low-volume units will far outrun the estimated amount. This may result in him being awarded the contract as low bidder."

Let's not forget that every single one of these contracts was given to the low bidder. They had no choice because, Mr. Speaker, they had nothing to compare the bids against, so they simply handed them out to the low bidder.

"So when the final contract quantities are known, and the low-volume units are found to have actually increased, it becomes apparent that the contractor has benefited from unearned profit."

In other words, Mr. Speaker, by deliberately bidding low — and let me remind you, every one of those bids accepted were the low bids — the bidder can somehow make up more than he would have made had the high bid been accepted and the extra margin been given there. The margin spread of the overrun is substantially higher for the low bidder, and the result is that there is the opportunity for fraud, which the Swan Wooster report had made clear could have occurred in these areas.

Until such time as we have looked into this even further, we are not really going to find out whether that fraud occurred in this area of bid loading.

You see, Mr. Speaker, in terms of bid loading, according to the report here, on page 17, when the final payment is made it is based upon the number of units of work actually performed, so the contractor, then, has the opportunity of loading his bid. This may well have happened in a number of these cases.

The general council of the railway prepared a paper on the Fort Nelson and Dease Lake extension, and in every instance in that report it indicates that the low bidder was chosen.

I ask the government to look into this matter: would it have been more efficient in these bids to have chosen the higher bidder who, at least, had some better idea of what they were up against than those low bidders who consistently went over? I think, had higher bidders been accepted, in actual fact there would have been less cost to the public and there would have been a more efficient utilization of equipment in the area.

Now this is where I will agree with the Hon. Member for Vancouver–Little Mountain (Mr. Cummings). We need a royal commission to look into this whole matter of bidding. The opportunity for fraud was enormous in those BCR bids in mid-1972. The reason being that the government didn't know what they were up against. This was obviously known to the contractors. They clearly knew how little the government knew, and the opportunity was there for substantial fraud and misrepresentation. In no way is it suggested that these people have deliberately gone out and done that, but I believe that when the government leaves open the possibility in that way, the government also has a duty to make sure that the bidders are protected, the contractors are protected and that the whole matter be looked into by way of royal commission.

The former fund-raiser for the Social Credit Party, Mr. Gunderson, director of the railroad, has come forward with statements critical of the analysis given by the Premier, and critical of the analysis given by Price Waterhouse. I think that a royal commission would provide him with the opportunity of getting before them on oath, under cross-examination, and explaining precisely what did go on and what did not go on.

It is easy for him to come up and say: "Oh, there was nothing to it; it's just a different accounting procedure. Anybody can devise a different accounting procedure." But until a royal commission is established, we are not going to get to the bottom of that. I don't think that there was necessarily any connection between Mr. Gunderson's efforts on behalf of the Social Credit Party and his position in the railroad, but that is again something that could be looked into by way of a royal commission.

Mr. Speaker, the next point I would like to touch on is a more general one. That is that the experience of 1972 makes it perfectly clear what happens when companies are owned by governments and they start operating them or using them for political purposes. In 1972 we had an extension plan. We had a desire on

[ Page 3311 ]

the part of the former administration to ignore proper engineering procedure and proper accounting procedure for political purposes. The contracts were given even though there was no knowledge as to how much rock had to be moved, how much excavation had to be done, no knowledge about what the fisheries service would say about possible bridging problems across rivers where salmon were spawning.

The Indians were involved and yet there was no signed agreement with any of the Indian groups concerned respecting the railway running over their lands. No wonder they are now blocking the railway. We had a government which proceeded, ignoring Indian land claims, ignoring the environment, ignoring engineering practice, ignoring good accounting practices, and they were doing it for political reasons.

I suggest to this government that the experience they have uncovered, the material they have uncovered on the BCR, is a pretty good, clear example as to why they should avoid involvement of the government in private concerns or public companies — or, indeed, when you set up a Crown corporation, of the need to set it up at arm's length without political interference.

The B.C. Rail story indicates clearly that the railway construction programme was used for political advantage. The stories that came out in the summer of 1972 about the BCR and the great things that were coming were designed entirely for political consumption during that election campaign. There is no reason in the world for this to continue in the future. It is a lesson for the government in terms of the other Crown corporations which they have at this time. It is a warning of what can happen when existing private corporations are taken over and start being used for political purposes.

Swan Wooster in page 4 states: "The decision to carry out detailed design simultaneously with construction appears basically to have been made on the ground that the time required for sufficient preliminary engineering would have delayed the start of construction." And, Mr. Speaker, a delay would have meant a delay past the election time. That is why the government of the day proceeded without proper engineering studies. The political decision was made ignoring the engineering considerations, ignoring the land claims consideration, ignoring the environmental considerations, and it did not, as it turned out, pay off. But the assumption of the Premier of the day was that it would.

From that, Mr. Speaker, I think it is clear that the government should not only appoint a royal commission to look into the statements that have come forward since the release of these technical reports of Price Waterhouse, and also Swan Wooster, but they should at the same time set up methods of preventing this from happening in the future with their own Crown corporations.

We have the assurance of the Premier, and I welcome it, that there will be nothing of this nature under his administration. Accounting firms will be brought in for auditing purposes and will be given a free hand. We have his statement that information on financial affairs will not be concealed. Yet, Mr. Speaker, we still have no check within the government, no auditor-general who could prevent this type of thing from taking place or prevent expenditures such as were mentioned by my colleague from North Vancouver–Capilano (Mr. Gibson) the other day, expenditures not covered by any legislative hat.

In this province we need to have a better system. As the system is presently set up, it would be quite possible for this whole sorry story to be repeated. We can accept the Premier's assurance that he and his administration will not do this type of thing. But we should be setting up better systems to prevent it from happening in the future. It is a different thing entirely from the overruns of the Department of Human Resources or indeed the costs of ferries, which are fairly predictable. This is an area where deliberate efforts were made to conceal. We want to make sure it does not happen again.

Mr. Speaker, lest people think that this is just restricted to this province or just to the party involved, let me point out that all the problems in northern Manitoba dealing with their forests and hydro developments there were very similar in their origin — governments making decisions without engineering studies, simply for political reasons, and governments eventually concealing for years and years and years until such time as the original problem was lost in history. This appears to be the case we're in today.

A final point is the question of the continuation of the railway. I listened with interest to the Premier state that the railway was going to proceed regardless.

HON. MR. BARRETT: No, not regardless. Read the report.

MR. D.A. ANDERSON: Provided the federal government put up — I believe the figure was $100 million.

HON. MR. BARRETT: If we complete the negotiations as outlined in my speech.

MR. D.A. ANDERSON: Well, the Premier is qualifying that, and I appreciate that I did not hear him correctly, or did not have the full information. Clearly this should not be looked at just in terms of whether we can ship $100 million out of the feds.

HON. MR. BARRETT: No, no.

[ Page 3312 ]

MR. D.A. ANDERSON: We're in a situation, which I've seen often, where both federal and provincial governments put up money, and provided the benefits marginally exceed the amount that either one of them puts up, they both proceed to go ahead. In other words, in this instance, if, from the point of view of the federal government, you have $100,000,001 benefit they will proceed regardless of how much it costs the Province of British Columbia. Similarly, from the Province of British Columbia's point of view, provided there is a slight increase in benefit above the cost put up by the province, then they will proceed. But the taxpayer pays the bill for both the federal and the provincial governments.

Whipsaw situations such as this one, with respect to joint federal-provincial programmes, should be looked at with the greatest care and scrutiny because there is really no legislature or parliament which looks intelligently at joint federal-provincial programmes. They simply look at these programmes in terms of whether or not their contribution is less than the total overall benefit. The result, as the Minister of Economic Development (Hon. Mr. Lauk) knows full well, is where you get into joint federal-provincial ventures with respect to regional development, the total value of the programme is something substantially less than it would be if the money was spent elsewhere. But because for each of the parties there is certainly some benefit, and because each of the parties has no responsibility for the other's costs, you get into situations where, because the federal government and the provincial government are involved, hundreds upon hundreds of millions of dollars are spent in a way which does not either suit the interests of the taxpayers or indeed benefit the economy or the province.

So I urge the Premier to look most closely at that proposal to proceed, because if it's not worthwhile to proceed, then obviously the decision should be not to do so.

I would like to suggest to him at the same time — I'm here quoting from The Province of Friday, October 13, 1972: "Barrett said his government will finance the railway in the same way Social Credit did by buying more shares in the capital stock, all of which is owned by the provincial government."

I would like to suggest that this is not in order, and that the Premier should re-examine his statements regarding the railway and the financing of the railway, so that we can in future get a true picture in terms of cost.

The Premier in his speech indicated that the losses this coming year are going to be substantially higher than last, and that this will continue for some time. He also indicated — and having looked at the documents, it's clear — that initially he himself signed documents which he did not realize were not accurate, in the first year after takeover. I think that in the light of those things there are tremendous needs for going another step, proceeding further, calling the people involved who are questioning the many reports tabled, but in particular the Price Waterhouse report and the Swan Wooster report. Have these things examined, have people cross-examine who doubt them, so that this matter can be settled once and for all.

As I said at the very beginning of my talk, this is not simply a question of a government spending more money than originally expected. It is a story of concealment; it is a story of deliberate falsification by the auditor of the financial picture of the company; it is a story of interference; it's a story of violating proper engineering practice in terms of proceeding with construction prior to doing the detailed engineering work. It's a story which exceeds by a substantial margin the traditional cost overrun of a government department which the opposition would traditionally expect to criticize. Until this matter is properly settled there really is a cloud over the head of all politicians in British Columbia on both sides of the House. If this is the way that the public accepts as the way public business is done, then we're all going to suffer somewhat. I believe that it's important to clear the whole matter up and to make sure new procedures are set up to prevent anything like this from happening in the future, regardless of who is government and who happens to be opposition.

It's all very well to discover problems; it's all very well to commission reports in certain areas of a previous administration's activities, but it's simply not enough to leave it there. What you have to do is follow it up to make sure that it can't happen again.

In the wake of Watergate, in the wake of the criticism of politicians elsewhere, perhaps it's too easy to shrug and say this can be expected; the public's not very concerned about it; what about something that happened yesterday or something that'll happen tomorrow? True, we have to worry about the present as well as the past, but it is important when a matter of this nature is uncovered to make sure that the thing is thoroughly canvassed, and I believe that a royal commission is our only way of getting to the absolute bottom of this whole affair. We're halfway, and I urge the government to go the whole way, regardless of where the chips may fall.

HON. A.A. NUNWEILER (Minister Without Portfolio): I would like to point out that the British Columbia Railway is a resource railway. It serves a large region throughout northern British Columbia; it is really the lifeblood of the economy of many communities throughout a large part of northern British Columbia — the real lifeblood of the economy. It is essential that it be there to continue to provide the employment and serve the industrial needs in processing the natural resources that we have

[ Page 3313 ]

out there. We've got many communities that depend on it.

But the point is the fact that the railway is so important to the people in the north. It should also be important to the people that it has good management, good standards, a good quality of roadbeds. We have witnessed here, not only during the last week but during the last year or two, a real serious problem to uncover — problems that have existed for years.

We've had many complaints. The Member for Cariboo (Mr. Fraser) had mentioned the morale of the employees. This is certainly a major concern. Morale of employees is important; safety conditions are also important. But when we find, going through these reports, the quality of the construction that took place on the Fort Nelson line, for example.... You just need to glance through one of these reports. It shows treated ties. Fort Nelson — 50 per cent of the ties were treated. Ties per mile were 2,880 on the Fort Nelson as compared to 3,170 on the Dease Lake. The rail was 85 pounds, which compares to 100 to 130 pounds on a standard railway. Rail anchors: not one single rail anchor on the Fort Nelson line. Culverts: Fort Nelson line — poorly installed. Construction quality control: insufficient control. I've heard many reports of steel that had been left on the wayside and covered with bulldozers — a tremendous waste...not only a waste but inferior materials were used.

This is certainly a very, very, very big problem. It is going to require the reconstruction of the Fort Nelson line — not only the poor construction that we have witnessed so far but the reconstruction. There is evidence in the engineering reports that shows there is anywhere from four to seven diversions that need to be provided. That is going to cost hundreds and hundreds of thousands and millions of dollars to reconstruct the line.

If anyone embarks upon building a railway, why not build a good railway? We've had 270-some derailments on the Fort Nelson line; that is more than one derailment for each mile of track. Hundreds of thousands of dollars of equipment has been smashed as a result. That is the type of money that should have been put into roadbed in the first place to provide a quality standard of railway grade.

MR. FRASER: What does the CN have?

HON. MR. NUNWEILER: The CNR and CPR are very good examples of what a good railway is all about, Mr. Speaker.

Interjections.

HON. MR. NUNWEILER: The question on the Dease Lake as to what was initially intended on the Dease Lake: we've heard very many comments but I think one person who really knew what he was talking about, or at least knew what the intent was, was the former Minister of Resources, who was quoted in the Prince George Citizen a couple of months ago. He says that the Dease Lake extension of the BCR was never meant to be economical. The purpose was to tap the Yukon. So I suppose the name of the game was Yukon or bust. Build any kind of a railway under circumstances where you keep down the estimates and generate overruns for political reasons. Williston knew what it was all about, but those who made the books decided to hide the facts. When you find that over a period of 13 years the ones who kept the books hid the losses...they hid the deficits just so they could show a profit.

We look at the annual report, and it shows that auditors say the statements are prepared in conformity with the uniform classification of accounts prescribed by the Board of Transport Commissioners for Canada. The auditors have proved that the Board of Transport Commissioners accounting practices were not followed in the year 1971 — the same thing in the year 1970, 1969 and 1968.

There's only one conclusion we can come to, Mr. Speaker. It was mismanagement, incompetence and deception of the public for some $55 million over 15 years. Now we do have for the first time in the history of British Columbia an honest financial statement that shows the real picture of the British Columbia Railway, the first time the public of this province has a full picture.

MR. FRASER: Tell us what the BCR did for Prince George. Do you believe in burying the stuff in the books?

HON. MR. NUNWEILER: "Do you believe in burying the stuff in the books?" That is a very good question. Yes or no? Yes or no? Do you believe in burying stuff in the books?

MR. FRASER: Tell the people what the BCR did for Prince George.

HON. MR. NUNWEILER: Do you believe in false accounting, in false statements and annual reports 15 times, 15 years in a row?

Interjections.

MR. SPEAKER: Order! Order!

HON. MR. NUNWEILER: Mr. Speaker....

Interjections.

[ Page 3314 ]

MR. SPEAKER: Order! Too many echoes. Please!

Interjections.

HON. MR. NUNWEILER: Mr. Speaker, we don't need a railway that is substandard. We don't need a railway for political purposes. We don't need a railway that is mismanaged. We have got a wonderful bunch of employees on that railway.

MR. FRASER: If you get off the BCR directorate, it will help.

HON. MR. NUNWEILER: We have taken the right course in order to publish an annual statement, which we have done now. It was essential to examine all the details as to what has happened so that we can, for the first time now this year, come out with an accurate report with the true statements, as compared to the false statements in the reports that we witnessed over the past many, many years.

Also, Mr. Speaker, when the former Minister of Resources had said it was going to the Yukon....

MR. FRASER: We never had a Minister of Resources. It is the Minister of Lands, Forests and Water Resources. It still is. You used the wrong name for your portfolio; don't rename the other ones either.

MR. SPEAKER: Order! Order, please. The Hon. Member has already spoken. I think so.

HON. MR. NUNWEILER: Mr. Speaker, a railway to the Yukon is a railway that is going to benefit the people of the Yukon. If that was what the name of the game was, why were there no federal negotiations taking place in those years so that the people of this province would not be the only ones to carry that kind of a burden?

If it was going to help the people of the Yukon, the federal government should have been party to it. They have agreed, now that our recent negotiations are taking place, to provide capital grants to participate in constructing that railway. It has been indicated that they will come up with $100 million. Negotiations have not been finalized, but I certainly do hope that they will participate if they are really sincere in providing a railway to that part of the province.

Mr. Speaker, the British Columbia Railway has a wonderful potential with the right input and adequate participation from the federal government. We are going to have a British Columbia Railway in northern British Columbia in due course that we can all be proud of.

SOME HON. MEMBERS: Hear, hear!

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, I will try not to repeat a lot of the documentation that has been quoted in the House, because I don't think there is any doubt of the basic importance of the railroad to the economy of British Columbia. The Member for Cariboo (Mr. Fraser) pointed out the extreme importance of the railroad to many communities which otherwise might not have developed in the first place. I don't think any of us can dispute that fact.

What we are really here to determine is the wisdom or otherwise of increasing the borrowing power of the railroad by $200 million. To debate that question in the light of how money has been spent in the past 15 years or more on the railroad.... The whole question, in my view, relates to the efficiency with which the railroad has been operated and the efficiency with which extensions of the railroad have been planned and implemented. It seems to me, without repeating much of the documentation that was provided for the Members and which has been quoted this afternoon, that on two scores the British Columbia Railway has been very badly managed by government in the first place and, in many instances, by the decision of BCR management in the second place.

The record is very clear of the very inadequate degree of engineering studies that were done prior to the construction on the Fort Nelson and Dease Lake extensions.

There is one particular theme that seems to come through. In the bidding, not only did the lower bidder always get the job — and in the documentation available not only is it obvious that a great deal of contracting work far in excess of what was stated in the information made available by the railroad — but time after time in one of the reports which the government authorized through the department of the B.C. Railway there is a history of controversy, abandoning of contracts, and interference by government.

I would like to quote one particular example that is very interesting. It's on page 20 of the report by the railway, entitled "History of the Railway Line commencing at Odell through to Dease Lake as of January 75." The contract, after the usually inadequate preliminary engineering work was awarded to Zanatta and Levac Bulldozing Ltd., on July 5, 1971.

The other interesting thing in that bidding, Mr. Speaker, is that the highest bid was four times higher than the lowest bid. The contract was awarded to the lowest bid and it states on page 21 that on April 4, 1972 the chief engineer wrote to Zanatta and Levac Bulldozing Ltd., and Gretzinger and McDonald Construction Ltd., a double-registered letter without prejudice, that since this firm stated their intentions of abandoning the work the railway company would

[ Page 3315 ]

exercise their rights under clause 15 of the agreement made in July, 1971.

Without quoting all the details, Mr. Speaker, the significance of that double-registered letter sent without prejudice meant that the railway company would retain the deposit, it would retain other payments and all charges related to the execution of the clearing of right of way.

Subsequent to this, the report goes on to state that Tony Zanatta, one of the principals of the firm paid a visit to the chief engineer and threatened him with physical violence if the terms as stated in the above mentioned letter were exercised. I quote you on the bottom of page 21: "Mr. Zanatta then stated that he intended to approach higher authority, and if necessary to ask for an appointment with the Premier." April 4, 1972.

The report goes on to state — and this is the key, I think, to one part of this whole sordid episode: "On or about April 10, 1972 the chief engineer was instructed by the vice president to withdraw the letter dated April 4, 1972 addressed to the subject firm. He was instructed to pay the contractor for work done, retaining the security deposit, and permit the contractor to remove his equipment from the job. These instructions were carried out by the chief engineer."

I'd just like to ask the question that when things were being so badly managed, figures on which the contractors placed bids were apparently unrelated to the amount of work that required to be done, when the contractors decided that financially they couldn't meet the contract and raised, in this particular instance, strong opposition and stated that they wanted to see the Premier — I wonder if in fact in this kind of situation the reason that the letter was withdrawn and the contractor given some further consideration to be able to retain ownership of the equipment — I wonder if this kind of incident which is related in this report represents direct interference by the Premier at that time.

It's not that one has to depend on this one kind of episode and these various reports to believe the argument. There was a great deal of interference from above in the running of the railroad. We've already heard the statements that the auditors were restricted considerably in the degree to which they could truly audit the books of the railroad.

We've heard the statement repeated many times by the auditors that financial reports did not fairly represent the state and deficit of the railroad. We've had the statement included in section 8 of the Minty report that little or no internal or external audit on millions spent annually on B.C. railroad construction took place. We've had the statements that there was great limitation on the preliminary engineering studies. Again, in case the feeling is that the opposition is just making general blunderbuss criticism there's the statement in the Price Waterhouse report, for example, that the 1,000 freight cars costing $16.3 million were written off as a charge to equipment rental. Equipment rental over 15 years.

MR. D.E. LEWIS (Shuswap): Equipment rental! That's deceitful.

MR. WALLACE: So, before I deal with the more general aspects of this debate I think that it would be wrong just to skim over some of the specific examples of documentation which are available to the House and which clearly demonstrate deceit and deception — financial practices which if any individual Member of this House carried out privately, would probably end up in jail. This, I think, is one important reason that I would strongly support statements that have been made earlier in the debate that some further inquiry is required.

Already I've had comments by the public: "Well, of course, this is all a political hassle. The government of the day is just trying to get back at the former Premier W.A.C. Bennett." Of course, Mr. Speaker, I run into this kind of problem personally too, whenever I criticize the former administration — "It's just a vendetta between the Member for Oak Bay and W.A.C. Bennett." That's a very nice and easy way to try and wriggle out from under some very solid facts and figures which have been revealed in these documents.

I am not even at this point in time preparing to try and develop any kind of criticism which is based on personal attacks on anyone. What we're attacking is a serious lack of truth in government.

We have every day in the newspapers the public asking for law and order in society. I have said already in this House that law and order, if that is ever to be achieved, has to start with the example set by the people who write the laws. It surely has to be a serious situation in this province when we have all this documentation and all the facts and figures before us to show that the former administration in its management of the B.C. Railway fell far short of the standard of honesty and sound financial practices which apply to every individual in our community.

As I said a moment ago, if we have legislators writing laws — my goodness, we know how thick some of the legislation is that we discussed dealing with the Companies' Act, the Trust Companies' Act and many other Acts which were intended to protect the individual citizen from being cheated in the marketplace. We have a whole new department set up in this province — the Consumer Services department, the primary function of which every Member in this House has supported — to protect the individual citizen from false advertising. What a joke when you look at the information we now have about the B.C.

[ Page 3316 ]

Railway! Who was doing all the false advertising about the prize jewel in the crown of the Social Credit administration. We find that the prize jewel was a prime example of false advertising.

Don't let's get away from the facts paragraph by paragraph in the annual report — it's all here. We have an accounting firm of the highest repute starting on page three. It takes six items of basic content in any company, corporation or business' depreciation, labour, interest, maintenance, bond discounts. Time and time again all through these paragraphs the accountant goes on to describe how these operating costs were misrepresented and shown in a different way as capital. One in particular seemed rather interesting. Bond discount on the issue of long-term debts was charged to construction.

Depreciation is mentioned — I realize, perhaps, that there's some room for debate as to how depreciation is handled. But in track-laying labour, interest, maintenance and bond discount there is no excuse or justification for the way in which the figures were misrepresented. The example I quoted of 1,000 freight cars costing $16.3 million written off as a charge to equipment rental seems to me to be stretching the truth considerably.

What I'm saying, Mr. Speaker, is that while we shouldn't be repetitive in this House, it is perhaps important that in this one debate for the record that Members of the opposition state their clear position as to whether they accept these documented figures and facts. Because if they are to be accepted — and I certainly accept them from the authorities where they originate — the record will show forever and a day to come that there was, indeed, deliberate deception by the administration of that day.

What we have to go on to consider is where.... Before I just touch on that, Mr. Speaker, the other documentation which was provided by studies by the railway staff entitled "A History of the Fort Nelson and Dease Lake Extensions" is just incredible in terms of the constant almost unexceptional series of contracts which were let at a certain price and where the overrun was all orders ranging from 50 per cent upwards.

The most incredible statement in that report, right at the beginning, regarding the feasibility studies which were inspected by the railway staff — and I am referring to this study carried out by the railway staff in 1974 — the most incredible statement early in the report is that nowhere is there any reference to capital cost projections.

I think if we had had some concern about the predicted costs of the Columbia River treaty, and that certainly caused a great deal of debate publicly in this House, here we find an even more incredible fact, that apparently there were no projected capital costs at all in relation to the planned railway extensions.

Right through this statement, time and time again, we have overruns. For example, the fourth contract from Neeta Creek to Fort Nelson had an overrun of 57 per cent. Another element of misrepresentation if not deception — we find that the Fort Nelson extension was described as being operational in 1971, and yet here we are in 1975 and apparently the costs of that extension are still being included under the construction department and not the operating department, which seems a strange misrepresentation of the facts.

There is another example in this report of an overrun of 100 per cent on the Cattermole-Trethewey section. There are examples quoted by Argus Construction of an overrun of 86 per cent. The Member for Vancouver–Little Mountain (Mr. Cummings) quoted some of the other parts of the report dealing with the installation of culverts and the very basic and absolutely fundamental kind of precautions and supervision and management which would have surely been obviously required on a project of this magnitude with millions of dollars involved.

So before we consider the justification for borrowing another $200 million, and the future of the railroad, I think these very substantial examples, well documented, and very impressive in their seriousness, should clearly be on the record of this House.

I think, as the Liberal leader (Mr. D.A. Anderson) said, it is nothing less than an insult to this House that the Leader of the Official Opposition (Mr. Bennett) who has been dancing up and down for the past weeks and months screaming about what is wrong with the railroad and that the government of today is keeping information which should be brought out in public, I think it is nothing less than an insult that he is not here in this House for the debate.

HON. W.S. KING (Minister of Labour): He can't stand the heat.

Interjection.

MR. WALLACE: We've had questions asked in the question period on the B.C. Railroad, and many of the reasons these questions could not be answered at the time, I presume, was the preparation....

Interjections.

MR. WALLACE: I notice the official opposition is really very silent today, just like they were silent when the Premier introduced second reading of this bill.

MR. PHILLIPS: Would you like to give me your

[ Page 3317 ]

place? I'll show you how silent I am.

Interjections.

MR. WALLACE: The day, Mr. Member, that you become silent will be the day that hell will freeze over. (Laughter.)

But I think, Mr. Speaker, that what impressed me most on second reading of this bill was the way in which — I notice I've managed to bring them into action — the thing that impressed me most was the stony silence with which the Official Opposition received the solid, clear-cut accusations based on facts and figures by the Premier when he introduced this bill. I've never seen or heard them so silent all this session, and I notice today that not only is the Leader of the Official Opposition (Mr. Bennett) absent....

AN HON. MEMBER: He's not absent.

MR. WALLACE: Well, if he isn't absent, perhaps he should be in here presenting his party's position in this debate.

AN HON. MEMBER: He's going to close the debate.

Interjections.

MR. WALLACE: Well, the Leader of the Opposition we hear is not absent. I presume he is sitting in his office listening to this debate on the squawk-box, and we'll be very pleased to hear him take his part in the debate later on.

HON. D. BARRETT (Premier): He's holding out.

MR. WALLACE: The issue before us now is the future of the railway and what corrections seem to be clearly indicated. I would just like to make a few comments in that respect.

It seems to me that for the same reason we have talked about the railway in the past being the economic lifeline of this province — but nothing is going to change that. There may have been bad mistakes in the past, both in management and in planning, but if this province is to continue in a sound and orderly path of economic development, there is no question that we require an efficient and well-managed railway.

Comments have been made and have appeared in the press today that government policies have depressed the kind of development of natural resources which were anticipated in order to make the railway extensions an economic possibility. I think that has to be part, but only part, of the story. I happen to believe, contrary to the official opposition, that world markets do play a part in the health or otherwise of resource industries, regardless of government legislation.

Interjections.

MR. WALLACE: Well, I feel that these are two very important factors that are interrelated.

Interjections.

MR. WALLACE: I believe that the factors are closely interrelated and both government legislation and world markets play an interrelated part in the degree to which resources are being developed.

In the light of the very extensive study which was carried out as to the economic feasibility of the extensions, also in light of history itself which shows that mining and forestry are cyclical industries, that there will inevitably be a revival in the strength of these industries in the province, it seems to me that you don't stop planning railway development or extension once the resources are finally discovered and developed. You have to have a lead time of several years in order to provide the railway extension at the time the resources are to be shipped to market. On that basis, it seems to me that continued development of the railway is indicated, despite all the mistakes of the past. What I would have to suggest, however, is that we try to do a little better in the future than we've done in the past in regard to such basic aspects as management, supervision and efficiency in the very fundamental aspects of running a railway.

If there's one area in which this government has received — and rightly so — great criticism from the people of the province and from the business community, it is that its capacity to manage and its capacity to administer is very much below the level that taxpayers expect a government to exhibit in the handling of their money. Time and time again we hear members of the public saying that this government has many good ideas, but their capacity to implement them, and their inefficiency in administering planning and spending of funds, is frightening.

While the president of the railway has pointed out, and the documentation has been referred to many times, that other people have made mistakes and covered up their mistakes, the time is now for this government to bring better management into the railway, better supervision of its financing, and a much more open approach in relation to the public, by demonstrating unequivocally what it is doing and what it is costing.

We've heard a great deal from this government about the need for an inquiry into the Columbia River treaty figures, and the fact that the government of that day tried to attribute certain costs to a different department, or to distribute the costs of the

[ Page 3318 ]

dams to other departments, and this has caused a great deal of public concern and confusion. All I would say is that if there is justification for an inquiry into the Columbia River treaty, there is several times that amount of justification for an inquiry into this whole mess on the B.C. Railway, particularly since we know that in the year just finished the railway lost $32.2 million, and the Premier, as president of the railroad, has forecast a larger loss in 1975.

Regardless of the past, but not overlooking the past, I think that the responsible path for the government to follow at this time is to set up some form of detailed inquiry under neutral, independent people, not only to prove from a neutral direction the authenticity and the validity of the documentation and figures which they have already produced, but to try and build up in the minds of the people of British Columbia some sense of confidence and trust, confidence that the railroad from this time onward will be managed by competent, able people, and trust in the fact that the true financial picture of the railroad will at all times be depicted in the official records and will be always open to scrutiny and input from the taxpayer, who, after all, is putting up the money to keep the railroad alive, and to carry out the extensions which are so obviously desirable.

To sum it all up, Mr. Speaker, it seems clear to me that the former administration cheated. It purposely deceived the public of this province. The top levels of the government, particularly the Premier of that day himself, interfered and pressured various levels of management in the railroad with the specific goal of purposely hiding the true financial picture of what he wanted so proudly to call the jewel in the Social Credit crown of development. But that is past and is no justification — not that I am suggesting the government calls it justification.... But I wouldn't want anyone to think that the sins and errors or the past can be any justification whatever in the future to continue anything but a very open, frank and completely understandable statement of the true finances in the railroad that the man in the street can understand.

The economic importance of the railroad is quite clear. The present slump in mining and forestry, I believe, as the experts believe, is temporary. I think it would be foolish because of temporary difficulties to delay the transportation facilities in order to ship out the resources which two years or three years or five years from now will be available at world market prices which will be attractive.

But above all, the people in this province want to find confidence in this government and they want to be able to trust the government in a way which these recent revelations have shown they could not trust the former administration. I hope that the Premier in winding up debate will give us some statement as to what his government now wishes to do with all this information. I think it would be tragic if this appeared to remain purely a political dogfight where the government of today, for purely political reasons, is trying to smear the government of years gone by. I don't believe that is the case. But there is no question, on the other hand, that this valid revelation of facts and figures is a tremendous political weapon.

If the Premier now or in the near future uses it only as a political weapon, rather than a justification for change, a justification to bring in new accounting methods, new management methods and perhaps new methods of financing the future expansion of the railroad — unless these revelations are used in that positive way rather than simply as a political weapon to use against the official opposition, then I think the Premier will have fallen short in his duty to the future development of the province and the better use and management of taxpayers' money. So I think the key to the better management in the future is an independent review of the facts and figures with recommendations as to how the railroad should be managed in the future.

HON. MR. LAUK: I think I can assure the Hon. Member for Oak Bay, Mr. Speaker, that this is not a vendetta. This is fulfilling a promise.

This government was elected on the promise that we would accurately reflect the accounts of the Crown corporations and agencies no matter what those accounts stated. This is setting the record straight, Mr. Speaker, because we can't go on and correct the mistakes of the past unless the public of British Columbia know fully what those mistakes were.

It is important to know who made them. It is important, because claims are made even today from time to time in this House and around this province that the Social Credit Party was a party of proven record as good fiscal managers. It's easy to be good fiscal managers when you don't tell the truth; it's easy not to have losses when you hide them. That makes you a good fiscal manager, according to the Social Credit Party of the day. Now that they're caught, they're sitting on their hands, they're squirming and the Leader of the Opposition (Mr. Bennett) is in his office on the phone to Kelowna.

We're here to set the record straight. As the Hon. Liberal leader (Mr. D.A. Anderson) and the leader of the Conservative Party (Mr. Wallace) have indicated, they've read the accounts, they've seen the truth and they are as shocked as we are and as shocked, I'm sure, as the public of British Columbia are.

Who was the spokesman from the official opposition? Who was the speaker to speak in answer to these most serious charges that were made about Mr. Bennett and his cabinet? Who was the lead-off speaker? It was the Member for Cariboo (Mr. Fraser).

[ Page 3319 ]

What did he say? Did he defend the charges? He avoided them. I used to think that the finest figure skater in the world was Karen Magnussen until this afternoon, Mr. Speaker. He avoided one of the most monumental scandals in the history of this province for a full 30 minutes of debate.

Interjections.

HON. MR. LAUK: He avoided it — the worst scandal since the Sommers case, and he skated around it like Karen Magnussen.

Interjections.

HON. MR. LAUK: The CNR, says the Member for Cariboo, upgraded its main lines and so on and is doing so well and is a great railroad. I should remind you, Mr. Speaker, and remind the Hon. Member for Cariboo — who is listening on the extension phone on that call to Kelowna — that the CNR recapitalized three times, and those were taxpayers' dollars. There is no railroad in North America that makes money. Let's not kid ourselves — no railroad in North America makes money. The British Columbia Railway overall, taking everything into account...no railroad makes money.

The British Columbia Railway is a unique railroad. It is a development line. It is the only railroad of its kind in North America. No other railroad builds lines into inaccessible areas for the purposes of social and economic development like the BCR.

There's no quarrel with that, Mr. Speaker. We support the railway, we'll continue to support the railway and the New Democratic Party and the CCF have consistently supported that railway for these many years. It brings resource development to the north; this railway is essential to the north. That is not the issue.

Even normal railroads — the non-development railroads — in North America are not making money. They're losing money. We were told, Mr. Speaker, that the British Columbia Railway made money. It didn't not only break even, it made money. The Members of the opposition in those days knew that was a fantastic story — a development line railway, the only kind in North America, making money.

But they said it was true; Mr. Bennett said it was true. He said it made money. He said: "Pay as you go." The Member for Cariboo — I must sympathize with him. He stood up in the House today and said the same thing. "Pay as you go," he said. Mr. Bennett said that it made money. He said: "This railway will pay as it goes." But that was a false statement, Mr. Speaker; that was not true.

The Member for Cariboo said that there was no subsidy to the railway. Where was he? As I recall, in this House money was voted to purchase shares in the railway company over the years of over $100 million. The sole shareholder was the Government of British Columbia. Now if that's not a subsidy, what is it? You're quibbling with words, I say to the Member for Cariboo. He quibbles with words.

Interjections:

HON. MR. LAUK: Of course we will support this railroad, and we will support it with subsidies if necessary.

Interjections.

MR. SPEAKER: Order! Order!

Interjections.

HON. MR. LAUK: All right, that's enough. You're cutting into my time here.

Interjections.

MR. SPEAKER: Order, please. The Hon. Member may have made his speech if he keeps going.

HON. MR. LAUK: Thank you, Mr. Speaker. The Hon. Member for Cariboo....

Interjections.

MR. SPEAKER: I nearly recognized you.

Interjections.

HON. MR. LAUK: Mr. Speaker, may I have your attention, please?

MR. SPEAKER: Sorry.

HON. MR. LAUK: Thank you. The Hon. Member for Cariboo (Mr. Fraser) indicated that there were no subsidies. That was wrong. I'm sure he will admit now that I have refreshed his memory, that there was $120 million in shares. That's a subsidy; it was paid for by the taxpayers of British Columbia. Not that it was regretted, not that we didn't support it, but it is a subsidy. Let's not play with words.

The land claims. The former administration built railway lines over Indian land without so much as a by-your-leave, and no agreement.

MR. PHILLIPS: That's a lie!

HON. MR. LAUK: No agreement.

Interjections.

[ Page 3320 ]

MR. SPEAKER: Order please.

HON. MR. LAUK: Mr. Speaker, I would ask for withdrawal of that statement from the Hon. Member for Cariboo.

MR. SPEAKER: Order! Would the Hon. Member withdraw the statement that a Member deliberately lied. A Member can be mistaken, but you don't say he deliberately lied.

MR. PHILLIPS: Just be quiet, and I'll withdraw.

MR. SPEAKER: Thank you.

Interjections.

MR. PHILLIPS: I said he lied — he was misinformed. But that's all right, the record will stand by itself.

Interjections.

[Mr. Speaker rises.]

MR. SPEAKER: Hon. Member, if I didn't hear it, the thing to do is to draw it to the Speaker's attention. I'd be very glad to enforce the rules whenever it is brought to my attention that some words have been flung across the floor. But it is getting to be very hard to keep up with all the side conversations.

[Mr. Speaker resumes his seat.]

HON. MR. LAUK: Mr. Speaker, did I hear the Hon. Member withdraw the accusation that I was a liar?

MR. SPEAKER: I think he did.

HON. MR. LAUK: Did you withdraw it?

MR. D.A. ANDERSON: You don't have to answer to him.

MR. PHILLIPS: Yes, I withdrew unequivocally — because you are just misinformed.

MR. SPEAKER: Thank you, Hon. Member.

HON. MR. LAUK: Mr. Speaker, the lines were built without an agreement with the Indian bands to build those lines, and those are facts.

MR. PHILLIPS: They are not facts. You don't know what you're talking about.

HON. MR. LAUK: You file the agreement. You file the agreement in this House. There is no agreement.

Interjections.

HON. MR. LAUK: It's a sordid tale of total mismanagement, Mr. Speaker.

MR. PHILLIPS: There was an agreement, and you didn't sign it.

HON. MR. LAUK: There is no signed agreement. You file it, if you can find one.

Interjections.

MR. SPEAKER: Order! Order!

HON. MR. LAUK: There was no agreement. Now, Mr. Speaker, this is a typical....

Interjections.

HON. MR. LAUK: Now let's talk.... Oh, we're a little more active now, are we? Well, I'm glad I've got your attention because now we can deal with the financial statements. There are a number of things that were not said that should have been said, Mr. Speaker.

MR. CHABOT: Oh, the Premier made a mistake — he didn't tell everything.

HON. MR. LAUK: The auditors' report states:

"As described in note 2 of the financial statement, a review of the past accounting policies of the company has been carried out. It was concluded that the financial statements as of December 31, 1973, on an overall basis, did not present fairly the cumulative operating results of the railway to that date." After that "...and that certain of the past policies did not conform with the accounting regulations of the Canadian Transport Commission."

There are two statements there, Mr. Speaker. One is: the statements were false — that you did not conform to the CTC regulations when, in fact, they stated that they did conform.

Secondly: even if they did not state that, the financial statements of the past were not in accordance with generally accepted accounting principles, which is the usual statement of auditors. The financial statements of the past were wrong on two counts.

As for the $64 million — that goes back to 1957. This government has committed to make that up and to proceed with the line.

[ Page 3321 ]

Mr. Speaker, there are a number of other points that should be made about this tremendous scandal, and which should be discussed. I only regret very much that the Leader of the Opposition (Mr. Bennett) is not in the House. I wonder if he is going to speak. He said that the auditor resigned because of political interference. I wonder whose political interference he'd like to talk about now? His father's?

Mr. Speaker, we are here to set the record straight. This is not a vendetta; we are not trying to spill the blood over the past. What we are doing is setting the record straight for the people of this province, because we are fulfilling a promise.

Mr. Speaker, I move adjournment of the debate on this bill until the next sitting of the House.

Motion approved.

HON. MR. HALL: Mr. Speaker, I'd like to advise the House that we'll be continuing on this bill at 8:30.

Hon. Mr. Hall moves adjournment of the House.

Motion approved.

The House adjourned at 5:49 p.m.